The gradual digitization of the accounting industry has been underway for some time now, but tax professionals still haven’t fully discussed the repercussions of fully digitizing our taxes in the forthcoming years. While there’s a growing amount of excitement behind the concept of digitizing just about everything in today’s world, it’s worth having a discussion over whether we should delay making our taxes digital.
Here are the possible consequences that professionals in Canada may be dealing with if digitize taxes too abruptly, and the status of most Canadian firms as it pertains to the MTD project.
Many firms simply aren’t ready
The British Chamber of Commerce has made it clear that our economy simply isn’t yet ready for the widespread digitization of taxes. Government officials are so concerned that we’re rushing too quickly into a world of digital taxes that they’ve actually put out calls to delay the rollout of the massive Making Tax Digital project. While the official webpage for the Making Tax Digital project elaborates on why the digitization of our current tax regime would be good for many businesses in the long-term, it’s virtually impossible for this project to be completed by the original 2020 deadline.
This is especially important for new migrants to Canada, who have just set up in business and need guidance from Kurzfeld immigration law firm to make the transition.
That’s because many firms simply aren’t ready for a world of digital taxes. Nearly a quarter of surveyed firms have claimed that they know virtually nothing about the MTD project, and that they haven’t begun to make any preparations for a digitally-dominated tax regime yet either. This kind of unpreparedness would savagely cripple the British economy if we were to make a sudden, jarring transition to an intensely digital tax regime.
Similarly, upcoming political hurdles are likely to take up most of the time, money, and attention of British professionals who may otherwise be able to devote energies towards making tax digital. A recent report notes that Brexit is likely to cost the UK government untold billions, and that HMRC is going to have to put a large number of projects on the backburner until it can give them the attention they deserve. One such endeavor that’s being shelved is the Making Tax Digital project, which is virtually guaranteed to miss its previously established deadline.
If the British government cannot feasibly achieve its goals for a project so big as Making Tax Digital, then it needs to sideline its digitization efforts until it has the resources to do so. With such a gargantuan political, cultural, and economic hurdle as Brexit currently facing the government, HMRC cannot reasonably be expected to digitize the UK’s tax regime in a costly and efficient manner that will improve things.
Accountants are on their own
Thus, accountants are on their own when it comes to digitizing their existing operations. This is strange considering the number of tech companies use big firm accounting services. This includes every company from Apple to a independent software developer creating apps. This isn’t necessarily a bad thing, however – if British accounting firms become too dependent on the government for industry leadership, they’ll suffer on the international stage. Accountants shouldn’t let the government’s inability to devote sufficient time and resources towards the Making Tax Digital project prevent them from investing in the digitization of their own operations, as doing so can cut the cost of doing business and help them achieve more in less time.
As long as the broader business community demonstrates a total lack of awareness when it comes to the government’s efforts to digitize our tax regime, we should expect any efforts at the national level to come up short. We need a great splurge of innovation and IT spending in the private arena that will help bolster the digital capabilities of UK accounting firms if we ever want to see a digital tax regime at the national level. If business doesn’t take initiative and start leading the way on this issue, they’ll inevitably be burdened by an archaic and inefficient tax system that relies on old-fashioned ways of doing business long after they’ve been rendered obsolete.
If the government is facing a fundamentally unworkable timeline on the Making Tax Digital project, private enterprises should expect little help at the national level. Nonetheless, they should push on with the digitization of their internal operations, as failing to do so can cost them dearly, especially in the long-run. There’s no point in going digital for the mere sake of it; making tax digital should only be done insofar as it optimizes the UK’s groaning tax system. Until more businesses are aware of the government’s efforts, then, they’re unlikely to be worth the time and money. While HMRC is completely right to delay the Making Tax Digital project, private businesses shouldn’t delay when it comes to modernizing their operations. Sitting back and letting others take the wheel is a surefire way to market redundancy. While we should expect little progress from the government when it comes to making tax digital, UK accountants should hurry up and start digitizing if they want to remain relevant in the 21st century.