I have written previously about the coming future when, I believe, small business owners will be able to submit their annual financial statements directly to Companies House from their own accounting software.
FreeAgent already has some corporation tax functionality built-in and, with IRIS now potentially providing tax software expertise, it seems inevitable that small business accounting software will soon feature the ability to file tax returns directly to HMRC; again without the intervention of their accountant.
Xero, KashFlow and even Sage will inevitably do likewise.
The popular question is “Where will this leave accountancy practices?” Instead, I would ask Where will this leave the Government?
Because it goes unnoticed everywhere (but in the hard-pressed offices of accountancy practices) that it is the accountants acting for small businesses that are performing the essential quality control function for Companies House and HMRC.
Both of those Government agencies operate under a policy of accepting everything that they receive and checking a small sample later. Their own systems pick up only the most obvious, and non-technical, errors. It is the accountants who currently file this information - and they are the ones who make sure that it’s accurate, legal and complete.
Small business owners understand that their accountants perform this quality control role and (most) are willing to pay for the help with their legal compliance.
The Government gets the service for free – with accountants getting no thanks or recognition whatsoever.
When Companies House and HMRC start having to unpick, correct and re-assemble the unchecked information small business owners have sent directly to them, maybe they will realise how much they miss their unpaid army of quality control workers.
I hope so.