SHOCK – the Making Tax Digital announcements were a surprise addition to a budget statement, but HMRC’s proposals (and timescales) have caused shock.
Even with the consultation and recent feedback from committee, it’s likely that the priorities for implementation might change, but not the fact that the future is digital for all.
Stripping away the very legitimate concerns that many in the business community have around MTD, for accounting firms the central question boils down to:
“What do the MTD proposals highlight about your firm’s ability to deliver services over the next 5 years?”
The good, the bad, and the ugly
Taking this as the starting point some of the discussions I’ve had then turn to:
- What kind of a business are you going to be passing on? Is it going to be worth what you hoped/need? Or are you going to expect someone else to ‘fix it’?
- If clients have no choice but to adapt, neither have you. And if you don’t provide the leadership and security to keep them compliant, others will.
- Can you reduce fee degradation and deliver a profitable service?
- How confident are you that you can adapt? Can you formulate, agree on and execute an effective plan?
For some the future looks exciting, and for others there’s complexity and pain.
MTD itself has thrown up a number of concerns:
I’m not going to dispute for one moment the legitimate concerns expressed about MTD, and the recent work I did alongside Thomson Reuters- interviewing their clients for the IMPACT series of papers – really demonstrates and contextualises these issues powerfully. Including:
- The volume of change, and across such a diverse client, base makes it incredibly hard and time consuming
- We will be able to deliver but costs will go up
- Our clients won’t be able to cope, and it will be left to us
- They won’t want to pay
- There is no discernable business benefit
- HMRC are starting with those least equipped to deal with quarterly reporting
- The admin burden for clients will go up
- Our workload will increase
- What about those non digital?
However even if the threshold is set to that of VAT, it will only be delaying the inevitable. It just gives more time – so how do you use that time? How will will you respond?
Being a football fan, it’s not often I lean on a rugby professional for inspiration – especially when it comes to thinking about tax, the cloud and developing services, but there’s a first time for everything.
The MTD growth mindset
Tony Stanger, StangerPro and yes hero of “That try against England…”, and I recently took part in a recent run of practice management sessions for ICAS members. His message around coaching and performance, and the development of new skills to ensure success for the future was precisely relevant to the world that we find ourselves in.
Sitting through his session a number of times what occurred to me was that there are definitely two distinct mindsets we encounter within the profession at the moment.
With apologies to Tony, and borrowing heavily from the central ideas of Stanford professor Carol Dweck, these are:
MTD Fixed Mindset
- The value of change is low, the motivation for change is low
- I don’t have the experience and the skills (for change, technology)
- It is difficult, and hard, and is not something I can do naturally
- My time is better spent on things I know others want
MTD Growth Mindset
- What if I could?
- I won’t be defined or limited by what I have, and our clients circumstance
- There is a solution for for our firm, and every client
- There are no short cuts, and it’s going to take time
A firm with multiple partners can often see a mixture of the two, which leads to the irresistible force meeting the immovable object.
You could even change MTD to “adopting more cloud technology with clients” which cuts right across the digital agenda here, and see similar mindsets in play.
But what remains is clear, there is one road which says we’re in this and by hook or by crook we’ll make it a success, and another which is we’ll do the bare minimum required and largely maintain the status quo. Inevitably, in the long term the latter road will prove the most costly.
Choosing to be in control
If we want to be even more direct, this an occasion when either you take some action, or get overtaken by events (and others).
Ask yourself, which mindset do I have? And which am I going to need in the coming months? Do I choose to be in control or will I work it out as I go along?