- Businesses recognize the benefits of MTD, they just don’t have the time or money to implement it
- Data is the biggest obstacle right now, and quarterly reporting can emphasize that
- Bookkeeping software can be integrated with other business tools for cost efficiency
With HMRC’s Making Tax Digital (MTD) rules set to come into widespread use this month, new research from Wolters Kluwer says the challenge is no longer understanding what is required of businesses – actually using MTD to the maximum extent.
Data says anywhere between 50% and 69% of income tax clients still haven’t digitized their books, and there are no signs of improvement as we approach the deadline.
Since MTD mandates quarterly reporting, Wolters Kluwer is concerned that the initial deployment will expose some weaknesses in many of SMB’s technology stacks and data quality.
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Many businesses are still not ready for MTD
Although readiness is low, confidence in MTD objectives is very high – 69% agree that it will benefit their business and 56% even see positive impacts for their customers.
“The challenge is no longer whether firms understand what’s coming, but whether they can scale, especially when many income tax clients are not yet digitally empowered,” explains Associate Director of Product Management Mohammed Sidat.
Currently, the main challenge is the basis – data quality and reconciliation (47%). Customer onboarding and migration (44%), client communications (43%) and software integration (43%) also top the list.
Wolters Kluwer also notes continued differences, with younger customers under the age of 45 seen as more fit. On the other hand, there is still a choice of paper by 47% of the respondents.
Looking ahead to the new era of the MTD mandate, the report suggests that there are clear business opportunities in the financial and software sectors. Bulk compliance and bookkeeping software, workflow automation, and digital migration/onboarding are all services that may be in high demand for change.
As for those affected by MTD, the report reminds business owners to be mindful of the time-saving, bookkeeping and forecasting benefits that come with MTD, highlighting its long-term benefits. With 45% also concerned about cost, businesses are reminded that integrating MTD software with other key business tools can be more cost-effective than they think.
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