Is your firm ready for the new HMRC digital tax laws?

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New Xero research has found that, with HMRC’s digital tax laws coming into force in 2018, our UK partners are lagging behind other large markets when it comes to concentration of clients on the cloud.

The recently released Partner Benchmarking Report shows that 31% of UK firms have 80% or more of their clients on the cloud.

The April 2018 Making Tax Digital (MTD) start date is looming ominously on the horizon. But UK firms have clear goals to get clients online before the initiative kicks in.

Xero’s report has revealed that many UK firms have projects underway to convert their desktop clients to online. In fact, 56% of UK partners are planning to have 80% or more of their clients online by December 2018. It’s an ambitious goal, but an achievable one.

Preparing your clients

Firm owners need to start by familiarising themselves and their staff with MTD. Whether or not businesses declare their income or expenses, their bank transactions and other financial information will flow automatically into their digital tax account.

Submissions will need to be made at least once per quarter, which may necessitate more frequent interaction with clients. Before even addressing any of the changes, it may be necessary to reconsider billing. Partners could perhaps offer ‘packages’ to give them more certainty around cost.

Submissions will need to be filed from accounting software, using an app that is integrated with the client’s digital tax framework.

It’s hard to know what HMRC’s software will look like at this stage, so armed with all the information, start communicating with clients now. For accountants looking to help their clients go digital, it’s important to underline their value and explain how they will make the transition easy.

We’ll ensure that Xero fully connects to this new world as it emerges over the next few months. Stay tuned for future updates.

To see how other firms are faring on the cloud journey, read the full UK Partner Benchmarking Report here.

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