(Note, we now have a product that seamlessly allows businesses to keep spreadsheet records, while allowing the accountant to submit their returns digitally, complying with MTD)
I applaud the sentiment behind the government’s Making Tax Digital (MTD) initiative i.e. to (belatedly) drag the UK into the online, integrated and digital age. However, its latest iteration of what MTD means has elements that are bonkers. One ridiculous position HMRC has taken, that stands out above the rest, is its u-turn on spreadsheets.
For the tech savvy, MTD will be a breeze. Clear Books, founded nearly ten years ago, was an innovator and a protagonist in the cloud revolution. Let me say that again, the cloud revolution started a decade ago! The thousands of businesses that use Clear Books will not be impacted by the requirements of MTD, as the cloud and digital is in Clear Books’ DNA.
Online VAT filing, CIS filing, RTI filing or Auto enrolment. The online filings have come and gone. MTD is another filing in the digital age but Clear Books’ customers are the lucky ones.
The bonkers part of HMRC’s proposals is that HMRC, the very instigator of this MTD initiative, has shot itself in the foot. Its goal is to reduce error and therefore contribute to the Exchequer savings of £945m. Flying in the face of this, HMRC has announced in its latest consultation, support for spreadsheets saying,
“businesses will now be able to continue to use spreadsheets for record keeping”.
Spreadsheets, in the hands of your typical business owner, are the cause of the £8bn worth of errors that HMRC hopes to reduce. Controls over debits and credits? Integrity of basic principles of accounting? Typos? Validation? Verification? Collaboration? Copy Paste errors? Logging? Reporting? Business logic? Calculations? Accuracy? Completeness? Existence? Occurrence?
Don’t get me wrong, I love a good spreadsheet, but not to maintain the fundamental records of my company. Garbage In Garbage Out. In a bookkeeping context, spreadsheets, as a flexible table of rows and columns, are the cause of garbage.
My early MTD inspired excitement for British businesses was that those couple of million businesses that run on a spreadsheet would be ushered into the digital age. Unfortunately, I was dreaming. It seems the “spreadsheet” generation just got a free pass to hide in their comfort zone until the millennials take over.
I think about what normal looks like in the future. When my two year old learned how to swipe through photos on my iPhone, he assumed he could swipe any screen. He tries to swipe my MacBook Air; he tries to swipe our TV. He gets frustrated when he can’t interact with technology. There’s more, he tries to request a song from Spotify by talking to our Amazon Echo.
In 5 – 10 years time, as our children and grandchildren start, struggle and succeed in setting up their own businesses, are they going to use spreadsheets to manage them?
At the time I started Clear Books the way my co-founder, a typical business, knew its own business was doing well was by looking at its bank balance. Collaborating in the cloud with real time information was a game changer; they understood performance and position; they had confidence in the accuracy and completeness of records. They understood financial statements and their business thrived.
MTD was an opportunity for HMRC to achieve two worthy outcomes: 1) Get its savings; and 2) increase the productivity of UK plc by steering the country into the digital age.
Instead, we’ve got neither.
Find out how Clear Books is accommodating MTD spreadsheets