The Making Tax Digital scheme recently got handed another delay to 2024. This of course allows more time for business owners and self-employed to get their affairs in order, however by joining the scheme now before the deadline comes about, it could bring huge benefits which can take your business to the next level.
We spoke to Nordens’ Head of Strategic Advisory, Joe Sword, on the delay of MTD, the improvements needed for it to be a success, and also what Nordens are doing to make the transition to digital all the more seamless for our clients…
Just how important is MTD for businesses and individuals?
It is obviously important because it’s been enforced by HMRC and the government. The importance extends beyond the fact that soon it will be legal requirement, in that businesses should be embracing the technology on offer. By transitioning to MTD, businesses and individuals will have access to Real Time Information (RTI) which can be of huge value. Essentially, the more up to date and accurate your RTI is, the better decisions you will be able to make which stands you in the best possible position to execute growth and increased profitability.
There are definitely negatives with MTD, in that it feels like it has just been forced upon businesses, but the long-term positives definitely outweigh them in my opinion.
In terms of what HMRC are trying to achieve to become one of the most digitally advanced tax administrations in the world, is this important on a global scale or should investment and strategies be funnelled elsewhere?
Being the most digitally advanced tax administration in the world sounds great and of course from a shop window effect, that really benefits the UK’s image overseas. It certainly sets a precedent for businesses that you need to get all your tax affairs in order, otherwise HMRC will be penalising you. However, my concern is that it’s one thing saying this but implementing it will be a tall order for sure.
My gut feeling in dealing with HMRC for a number of years now, and all these new initiatives they roll out (CIS, Pensions, VAT Deferment etc.) is that they continually run before they can walk. Resources are certainly lacking and HMRC staff are consistently stretched to the limit, evidenced by the long wait times when calling them. By introducing this nationwide legislative initiative it puts pressure on all parties when released. This is why MTD has been delayed numerous times, coupled with a pandemic of course. We need to see clearer guidance put into practice, as ourselves and many of our clients have struggled with HMRC in terms of queries, documentation and communication.
The vision and ethos of MTD I completely agree with, but the foundations and preparation need to be heavily improved in order to reach the 2024 target.
Can you see another deadline extension past 2024 for MTD? Is it hopeful to expect all the self-employed and small businesses to meet this target?
I think the answer to this is two-fold. The self-employed and small businesses I believe can make the target as they are the ones who have in all honesty warmed to the idea of MTD the most. There will of course be some struggles and stragglers but these types of businesses, if partnered with good advisors, will definitely reap the benefits of MTD. This is where the support and education play a huge part, as without that learning and understanding of MTD then it arguably can do more harm than good.
The other side of the coin is whether HMRC are going to have effective systems to be able to maintain and monitor MTD on a national level like they’re saying. I highly doubt this with the current processes in place at HMRC. Given that they’ve already delayed it multiple times, I can definitely see another delay down the line. HMRC are well aware that if this is to be rolled out and be a success, then they need to be ready themselves. I just hope that these resources and efficiencies in question will be polished up by the time that the MTD deadline passes. At the end of the day, it’s all about priorities and I completely understand that HMRC’s priorities have been elsewhere due to the pandemic and subsequent economic crisis that this has brought on.
In an ideal world, I’d like to see self-employed and small businesses using the initiative to get the preparation of MTD sorted before 2024. So many of them are missing that opportunity presently to have access to that good quality and high valuable data which MTD brings. Data can equate to huge profit when used in the right way.
Is the awareness, education and resources surrounding MTD strong enough or can more be done?
Whether it’s strong enough is quite subjective but I can only really go by my experiences. I truly believe HMRC have made some effort, but I clearly don’t see enough being done in terms of learning materials on MTD. Communicating MTD in a relatable way for small businesses hasn’t been there and this all relates to the possibility of HMRC partnering with firms like Nordens, in getting the message out there and educating people on the benefits of MTD.
By collaborating and sharing insight, the results and exposure would definitely improve and as such the deadline would become more realistic. Yes there have been campaigns in newsletters, articles and leaflets from HMRC however this form of communication just isn’t enough. By getting to the roots and working with accountants, MTD becomes a team effort that will benefit all involved and contribute to a greater economy.
How can Nordens assist in making the MTD scheme a reality and a success?
We actually started the preparation for MTD assuming that it was going ahead in 2023, so from a company standpoint we’re in a very good position to be able to relay information and resources to our clients. As well as this, our Tax Manager, Adam Truluck, has begun compiling a wealth of insightful material which will further educate our clients and hopefully get them to sign up to MTD before the scheduled 2024 deadline, so watch this space over the coming months! In my eyes, it’s so much more beneficial in getting these types of things done early so you can have peace of mind that once the last-minute scramble comes along, you’re all good.
It’s one less thing to worry about from an admin angle, but also going back to my original point it provides a host of quality data which can really allow your business to prosper. From our point of view, one of the most frustrating things we encounter is seeing small business owners work themselves into the ground and not getting the reward that their huge efforts deserve. By acquiring the knowledge and skill set to become adept at MTD, you can see just where gaps are appearing in your business, as well as being fully compliant with tax so there’s no need to worry.
We hope this has outlined to you what MTD is and what improvements need to be made to the scheme ahead of the now rescheduled 2024 deadline. If you require any further information on MTD, our strategic advisory services, or anything accounting related for that matter, please don’t hesitate to get in contact with us at Nordens where one of our trusted advisors would be happy talking you through your query.