As a Chartered Accountant, it may surprise you to know I am not a fan of spreadsheets. These horribly complex, fidgety things, inevitably contain annoying error messages or formula issues. Printing them never seems to quite work out first time round and presentation can be somewhat inconsistent. Armed with my magnifying glass I stress over finding that inevitable wee nasty hingmy lurking in one of the cells.
As a Tax Advisor, my view on spreadsheets is worse given their somewhat dangerous, uncontrolled properties. The reliability of spreadsheets depends on the skill of the original designer. So flexible are they in nature, even the simplest examples can morph into monsters over time. There are countless examples of infamous spreadsheet errors prompting profit warnings, plunging share prices and unforeseen tax liabilities.
Digital accounting will be mandatory in the Making Tax Digital ‘MTD’ regime. As with the demise of manual/paper record keeping and despite HMRC’s promise to let spreadsheets link up quarterly with HMRC digital accounts, using spreadsheets for tax will surely become a thing of the past. Given that the latest apps now offer a systematic way to manage processes from source data through to final tax return in a reasonably straightforward fashion across all business sizes, this seems inevitable.
Software suppliers are developing drill down features allowing the user to click through from the submitted figures in a tax return all the way back to original invoices. This is achieved via a series of Application Programming Interfaces ‘API’s’, opening doors between different financial technology products. These seamlessly produce the controls, quality, accuracy, efficiency and auditability features accountants love so much and which spreadsheets will simply not be tolerated to deliver.
Let’s embrace the new tax order without spreadsheets – and enjoy a world of smooth and efficient processes.
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The information in this blog should not be regarded as financial advice. This is based on our understanding in August 2017. Laws and tax rules may change in the future.