Do digital accounting records really improve accuracy? Survey results

Six weeks or so ago, a blog post considered digital tax records and the impact on “accuracy”.

You can read the original post here.

There was a quick informal survey link at the end (which was totally anonymous). Whilst this did not have a huge response considering the 740 or so that had viewed the posting (as of today), it was pretty clear that the answer is a resounding “no”.

One third of respondents “strongly disagreed” and a further 28% “disagreed” – 61% with a further 28% neutral. Only 11% did agree that digital records improved accuracy and there were none that “strongly agreed”.

The original article put forward some thoughts and examples of “issues”. We asked in the survey for reasons for reduced accuracy. Some observations are extracted below:

Encouragement from software companies and HMRC to enter all receipts, tax deductible or not, because 'it's simple'

Automated and less visible entries in records

Lack of familiarity with computerised accounting

People don't think about what they are doing, they blindly process. Inappropriate staff are then used without the experience to question if something is wrong

Human error, pre-programmed software anticipating 20% VAT on all transactions, lack of review

Not understanding software and automatically selecting incorrect default VAT rates whereas on a spreadsheet they typically would manually enter actual VAT from the invoice

I am afraid I have said it on several occasions in meetings with HMRC, but the “real world” and expectations are vastly different. The comments above do not surprise me at all! And I am not the only one with that view. We asked for “any other comments” and a few responses have been chosen at random: -

Improved accuracy is a complete myth put out by HMRC

The authorities are either out of touch with the coalface OR just choose to ignore it?

The argument of 'more tax' being collected was always spurious and used by HMRC to justify the investment in MTD.

Massively increased costs combined with a reduction in accuracy - what an absolute farce.

We are using bridging software where we do VAT for clients – how does this improve the information going to HMRC? It just means that we need to prepare complicated spreadsheets instead of a simple manual schedule more than doubling the cost. As the software is only linking to boxes it is not really any more than copy and paste so gives no additional information.

The survey also asked, “How do you rate the success of MTD progress to date?”. The average score was 2.25 out of 10 where 10 is high and 1 is low. 6 was the highest score.

There is still time to complete the questionnaire and record your views. Two months on from the original, have things improved? Will we see a change of thinking towards digital records improving accuracy? The link is here.

We look forward to your comments (and as mentioned above, all are totally anonymous). (Note this is not an official ICAEW survey).