As I write, a new tax return filing year has just started and I’ve been reflecting on the past year, as well as planning for the new year on behalf of my practice and also the ICPA.
Thinking about the past year, we had the start of the much-vaunted ‘end of vat mistakes’ that masqueraded as MTD4VAT. The build-up was all about the reduction of errors, and now that we have filed several returns nothing is ever mentioned about the reduction of errors. Does that mean that the goal has been achieved? Or could it mean that error reduction was an easier sell, and was never what MTD was about at all?
The build-up foretold the end of the spreadsheet, and the cloud package producers were rejoicing at the opportunity this provided them to increase sales into a previously unreceptive market. So what actually happened? The government decided that they simply couldn’t impose significant additional costs on vat registered businesses and spreadsheets were permitted.
Suddenly, hoards of vat filing software appeared to accommodate this market, much to the chagrin of Xero, Iris, Quickbooks Sage et al. And worse still for these corporate giants was the fact that many were actually free to use.
The past year will, I think, go down as the year of the apology. Leading the field by a mile has been HMRC, who seriously must have invested in a whole new department to help them draft and publish apologies. They were closely followed by those other perennial failures, the banks. HMRC’s tech has failed many times in the past year – anyone involved should be frankly looking for new employment. But that’s not likely to happen when each failure is simply acknowledge with “we regret” or “we apologise for”. If it’s a big error then we get rolled out the ultimate HMRC apology: “We sincerely apologise for”.
The word sincere is defined as “not pretending or lying; honest”, which of course means that every previous apology not including the word sincere was applied to an error on their part. The upshot, of course, is that the Revenue is placing more and more burden on the taxpayer and their accountants to get their affairs correct – without any recourse when they fail to get their part of the transaction correct.
In 2019 we also saw an increase in the Revenue’s use of the ‘Failure to take due care’ judgement on taxpayers whenever it seemed possible, with the resultant increase in any fine. And yet a ‘sincere’ and even a ‘sincere and heartfelt’ apology fails to move HMRC, and is usually summarily dismissed with distain (and the fine is not rescinded). So when HMRC recognises a failure of their own – which is nearly always brought to their attention by a third party – they either deem the error to warrant a simple ‘sorry’, or in the case of a big error, such as their systems going down in January, a ‘sincere apology’.
When, however, the failure is by a taxpayer, which they draw to the taxpayer’s attention, then no amount of apologies, whether prefixed with a ‘sincere’ or not is not good enough. They must be fined, because only then will they stop making errors. What’s sauce for the goose is sauce for the gander. Who do you think has the easier job – a government department with a significant budget stocked to the gills with young dynamic tech types, or a taxpayer trying to work their way through an ever-growing tax code? Or even an accountant trying to do right by their clients?
For the coming filing year, love it or loath it, Brexit will be a major driver in our work as of course will the Coronavirus. We will have to understand how changes that our new relationship with Europe and beyond will affect our clients, so that we are best placed to help them when the questions start. We will have to handle the Coronavirus issue for ourselves and of course for our clients including the shut downs/lockdowns to say nothing of the funding, grants and employment help. Let’s not beat about the bush, the questions will come our way because we are still our clients’ most trusted advisers. In a world that is shouting at us to develop our practice to become ‘advisory’, then this is going to become a case in point.
I think we will be doing a whole lot of advisory work in the next tax filing year. I can foresee pages and pagers of content from ‘influences’, ‘consultants’ and ‘gurus’ alike, all extolling advisory work, all allied to a reduction in the time to process basic compliance information. The reduction in the cost of processing basic information is most definitely achievable, but providing advice to a client depends on a client that actually wants advice beyond what they have received in the past; a client that is actually prepared to pay for the advice (which we all know is not a given); and having the knowledge in sufficient depth to feel comfortable to give the advice.
Now if only all those are people being free with their opinions on ‘advisory services’ applied the above criteria before they poured forth I think we would be further along the road.
• Tony Margaritelli Chair, ICPA