- Businesses acknowledge MTD’s benefits, they just don’t have the time or money to implement it
- Data is the biggest barrier at the moment, and quarterly reporting could accentuate that
- Bookkeeping software can be combined with other business tools for cost efficiency
With the HMRC’s Making Tax Digital (MTD) rules set to be enforced more broadly this month, new research from Wolters Kluwer claims the challenge is no longer understanding what’s required of businesses – it’s actually executing MTD at scale.
The data states anywhere between 50% and 69% of income tax clients still haven’t even digitalized their books, and there’s been no sign of improvement as we edge closer to the deadline.
Being that MTD mandates quarterly reporting, Wolters Kluwer worries the first submissions will expose some serious weaknesses in many SMBs’ tech stacks and data quality.
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Many businesses still aren’t ready for MTD
Although readiness is low, confidence in MTD’s goals are pretty high – 69% agree it will benefit their business and 56% even see positive impacts on their clients.
“The challenge is no longer whether firms understand what’s coming, but whether they can execute at scale, particularly when so many income tax clients are still not digitally enabled,” Associate Director for Product Management Mohammed Sidat explained.
At the moment, the key challenge is of course the foundation – data quality and reconciliation (47%). Client onboarding and migration (44%), client communication (43%) and software integration (43%) are also high on the list.
Wolters Kluwer also notes generational differences, with younger clients aged under 45 seen as most prepared. On the flip side, there’s still a preference for paper by 47% of the respondents.
Looking ahead into the new era of MTD mandates, the report suggests there are clear commercial opportunities for the financial and software sectors. Bundles compliance and bookkeeping software, workflow automation, and digital migration/onboarding are all services that could be in higher demand with the change.
As for those affected by MTD, the report reminds business owners to remember about the time savings, bookkeeping efficiency and forecasting benefits that come along with MTD, highlighting its longer-term advantages. With 45% also concerned about the costs, businesses are reminded that combining MTD software with other essential business tools might be more effective than they’d thought.
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