A report by IT company Prism Solutions has highlighted how traditional accountancy firms are having to change rapidly to meet challenges such as Cloud computing, GDPR and HMRC pressing quickly ahead with ‘Making Tax Digital’ (MTD).
According to the report, the whole accountancy profession is now on the verge of an evolutionary change and accountancy firms will need to develop into digital practices in order to compete and survive.
One of the key change drivers and challenges for accountancy firms is HMRC’s ongoing ‘Making Tax Digital’(MTD) initiative which has been designed to eradicate paper from the tax filing process and to make the UK tax system more effective, efficient and easier for taxpayers to use.
The fact that an estimated 1.2 million businesses are subject to the MTD VAT rules (for VAT periods starting on or after 1 April 2019 or 1 October 2019 for organisations which are more complex), must now keep VAT records in a digital format and submit their VAT returns to HMRC using MTD compatible software (yet can’t do so using HMRC’s website) means that they are turning to accountancy firms to submit the returns on their behalf. This leaves accountancy firms with new challenges such as having to adapt quickly to a different type of interaction with their clients who are looking for accountants to be experts on the digital process and to provide instant service and issue resolution. Accountancy firms are also facing possible problems if HMRC doesn’t do enough to communicate MTD to relevant businesses.
The Prism Solutions report highlights how accountancy clients now expect technology to be ‘always on’ 24/7 and that the ability of an accountancy firms’ productivity to be able to connect with their clients in real-time, and offer access to real-time data that’s always on is an important way in which they can deliver an exceptional client experience.
The Prism report also notes that, just as Cloud computing, GDPR, and MTD are already having an impact on accountancy, other emerging challenges to the profession include the development of AI technologies, blockchain and crypto-currencies.
What Does This Mean For Your Business?
Having to digitise accounts is providing challenges to both businesses and accountancy firms and looks set to change aspects of the relationship between the two. Accountancy firms are realising that embracing all forms of ‘digital’ is a key enabler to enhancing productivity, and that becoming part of the digital revolution with their clients will enable them to not just offer a better service, but also to grow as they take advantage of new revenue-generating opportunities and position themselves as the go-to adviser for their clients.
As well as expecting ‘always-on’ service and digital expertise from accountancy firms, business customers will still want to use their accountants as a source of business advice for business planning, strategy, and market development (for example), and getting better at using digitisation to do this could be another way in which accountants could keep delivering value to businesses.