What is the government thinking about?
Those of you who have listened to me on ICBTV will know that over the last twelve months as we were locked down, unlocked, and then locked down again, I have been very supportive of the measures that the government has introduced to support people, and particularly business people, through one of the biggest crises certainly in my living memory. Whilst many things could and perhaps should have been done differently, I think, given the speed with which the cumulative measures have been introduced and the unchartered territory in which everyone could have been abandoned, they got most of it right most of the time. I think there is now a decent chance that Britain will grow back to what it was and more because of the measures that have been introduced and how people, especially bookkeepers, have gone above and beyond.
However, I now find myself at variance with our elected leaders and am beginning to question their direction and motives. I can understand that Ministers must look at the amount of money that is being lost to fraud and want action to reduce this silent burden on our citizens and our economy.
I have spent the last several days sitting through webinar after webinar about fraud. Most were the big stuff; banks, cryptocurrencies, identity fraud, scams, computer hackers, oligarchs. Very little was about the sort of fraud that ICB members report regularly – tax fraud. I firmly believe that most ICB clients are, to use my normal phrase, legal, decent, honest and truthful. But there will always be the odd one that thinks good bookkeeping is creating a set of books that ignores the truth and positions them for a smaller tax bill.
All too often we are told that the clients are aided and abetted by their accountants, who for some reason think their role in life is to keep tax from that nasty HMRC, presumably to ingratiate themselves with their willing clients. This is made so much easier if, along the way, they can convince their bookkeeper that they ‘know best’ and that they as accountants are ‘better qualified’ and ‘know how it all works’. Now is not the time to be minimising Tax, when the country needs every last penny it can get its hands-on, and it was never the right time to evade rather than avoid what is due to HMRC.
So, knowing that the collective government focus is on getting what is theirs and making it easier and more efficient to make that happen, why oh why is it hell-bent on digitalising everything, presumably in the belief that if it is digital, it can be trusted. Really?
Many members report that they regularly take on new clients who have ‘had a play’ with the TV-advertised, simple and rather pretty software that should have answered all their business financial problems, but merely created more. Bookkeeping is not easy, otherwise, why would almost 20% of students fail their examinations? And these are people who not only want to be bookkeepers but who have studied long hours and still have not got the point.
I remember more than a decade ago, June and I had been invited over to Australia to talk to the leading software company, aptly called Mind Your Own Business or MYOB, about how Australia could imitate and piggyback on the ICB success in the UK. The chairman of MYOB was a man called Craig Winkler and as we were being driven from the airport to our hotel in his hybrid car, he said (and I paraphrase here because it was a long time ago and we were jetlagged) “bookkeepers are in control. They have the power. They just do not realise it. Accountants have got their place, but they have not got a clue because they do not understand how small businesses work. And software companies like mine are run by techies who are good at technology. They are good at resolving everyday problems or simplifying boring tasks, but it is the technology that excites them, not the task that they are completely reinventing”. ICB Australia was born that weekend.
Some years later, Craig left MYOB and helped a tech start-up called Xero. I remember meeting with their CEO and founder, Rod Drury and later his counterpart on this side of the pond, the inimitable Gary Turner. The first thing that struck me about all three of them was that they seemed to be genuinely nice people. A dozen-or-so years later and I am still of that opinion. They had incredible vision, purpose and boundless but very understated enthusiasm for their product but always alongside their drive to make accounts and bookkeeping simpler, they repeatedly said that software would always be a tool not a solution.
So why is the government seemingly going down the DIY software route, automate everything, to the point of direct government access to accounts via blockchain? Someone has convinced them that it can be done. We need to convince you that it should not. We all know the fiasco over examinations when somebody made an unholy mess of the algorithms. So why will five million-plus sets of accounts be any more accurate?
Many of you will have watched my guest on ICBTV, Bill Dodwell, from the Office of Tax Simplification. At the risk of stating the blindingly obvious, his and his team’s focus in life is to simplify the tax system, and indeed the COVID pandemic and the devastation this has caused to businesses will probably escalate the measures they are putting to government. But surely the main point is that simplification does not, necessarily, mean reduction. That is a wholly separate question.
The first and guiding aim of tax simplification, and I hope that Bill would agree with me on this point, is surely to take away the grey areas, so that those professionals who provide tax advice, can be better at what they do, must make fewer judgement calls and, ultimately, can be held to account if they get it wrong.
I believe that the government could be opening a can of worms if it suddenly places its trust in the average person on the Clapham Omnibus getting their taxes right because they did it on their computer. As the tax system is today, they do not have a cat in hell’s chance and even with a simplified system, the government will be relying upon the understanding of tax, let alone the honesty and integrity of almost ten million businesspeople, rather than the current 90,000 professionals.
So, the government, to my mind, should concentrate on two priorities: Firstly, regulate agents who advise on tax and complete tax returns for clients. It is nonsense that any person, armed with a CPD certificate or even without any training at all, can call themselves a tax agent. Secondly, stop trying to persuade businesspeople who, in the main, have absolutely no clue when it comes to accounts and tax, that they should ‘have a go’.
Today’s accounting software is amazing, and tomorrow’s will doubtless be even better.
But if nothing else, remember what Gary Turner and others, such as Jennifer Warawa have been saying continuously at ICB Bookkeepers Summits: “Software is just a tool. Bookkeeping will always be about people”.