Taxpayers urged to do their homework when picking MTD software
Taxpayers included in the new Making Tax Digital (MTD) scheme need to think carefully and not just focus on cost when selecting software, says the Association of Taxation Technicians (ATT).
The regime, introduced in April, requires digital record-keeping and quarterly reporting through compatible digital tools. For many, this will be the first time they have needed to acquire and use accounting software, marking a significant shift in how they manage their record keeping.
Making Tax Digital (MTD) represents a fundamental change in in how taxpayers interact with HMRC, says the Association, and for some it will also introduce a new recurring cost of compliance.
While free options are available, these may be limited – either in terms of how long they are offered for or the functionality they provide. In practice, many taxpayers are likely to face ongoing costs depending on the software they choose and the complexity of their affairs.
Jon Stride, chair of the ATT’s Technical Steering Group, said:
“MTD is a big change for taxpayers, requiring them to keep regular records and requiring quarterly submission of data. Software will be required for this, but not all products offer the same features, and not all will meet every taxpayer’s needs.
“Choosing purely on price may not be the best approach – taxpayers will need to ensure that the software they select is capable of handling all aspects of their reporting obligations under MTD. Equally, not everyone will require the full functionality of more advanced—and often more expensive—accounting packages. Some taxpayers, particularly those with simpler affairs, may find that a spreadsheet combined with bridging software is a more appropriate and cost-effective solution.
“HMRC provides a tool1 to help taxpayers identify compatible software options. However, even with this support, taxpayers may still need to carry out their own research, seek advice from peers or agents, and consult independent reviews to ensure they select a product that is right for their circumstances.”
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