No Accounting for Taste ep219: Training the accountant of the future

Speaker A: This episode of no Accounting for Taste is brought to you by 2020 innovation, helping accountancy firms grow through expert training, practical resources, strategic consultancy and effective marketing.

Speaker B: Shall we begin?

Speaker A: Let's begin now. Hello and welcome back to no Accounting for Taste with me, Matthew Ord and the familiar voices of Accounting Web's Managing editor, Richard Hattersley.

Speaker B: Hello.

Speaker A: And technology editor, Tom Herbert.

Speaker C: Hi, Matt. Hi, everyone.

Speaker A: We also have a special guest today in Sharon Cook, Technical Director. The sponsors of today's episode, 2020 Innovations. Sharon, thanks so much for joining us. How are you?

Speaker D: Thank you for having me. I'm really good, thank you. Very excited to be talking a whole range of things today.

Speaker A: Good, good. Excited to have you. Well, firstly, like you said, we've kind of got you for the whole episode, which is an absolute treat. But also to kick off the show, you're going to have a bit of an in depth look at training in what is a changing profession. We've talked a lot about AI and the transformation that surrounds it. It comes up on basically every show for both firms and individuals within the profession. So let's look at how those changes are affecting firm strategy and team training plans as well. I know, Sharon, that, uh, you get great insight on training behaviors at 2020 Innovation. Are you seeing a change in appetite for different types of training?

Speaker D: Yeah, that's a really good question. And part of the reason I was really keen to talk about this today is we're obviously, I mean, all of us, I think, are doing a lot of research, having a lot of good conversations around what the role of an accountant is going to look like in the future. And this is something that our, um, members at 2020 Innovation and firms across the country are grappling with as well. And, um, in terms of the link between that and training plans, we're seeing some of it at the moment, but I really think we're going to see more as we go into 2027 and firms are, uh, bedding in their AI adoption strategy and looking at what that means for their teams and their skills.

Speaker A: So as you've alluded to then, some firms are going to be looking to start piecing together those 2027 training plans. It's funny, the next year always gets mentioned earlier in the year. You know, I haven't actually said 2027 yet. And here we are July 3rd, first mention of it. So people are going to be looking at those training plans. But given this wider context of change, what should firms actually be asking before they get to that point?

Speaker D: I think we are seeing this Move away from. What updates do we need now? Of course, all the good. Now I'm going to say this as a tax speaker. Uh, all the good tax updates, audit and accounting updates, they're absolutely critical. That's the technical foundation on which we build everything. But I think increasingly firms need to be considering what capabilities their people need going forward so that they can protect quality, use AI safely, price, place properly, and indeed grow the firm. So we very much encourage training to be on a plan first basis. So rather than just looking through a catalogue or letting their individuals look through a catalogue and go, oh, hey, that looks, I don't know if I could say it looks interesting if people feel that way about a tax update. But, you know, some must, some must. Uh, that looks interesting, that looks fun. But what we're really encouraging is a training planning process. So I think the reason it's topical at the moment is we're going soon to be seeing those 2026 training plans come to a close. And, um, we're starting to see 2027 training plans build. And as we build those training plans, there should be, in my view, a real interlink with the firm's strategy about growth, about technology adoption, about attracting the right type of people at the right levels. And then that foundation is where the training comes from. So we're considering risks, we're considering workflows, we're considering how to get the best, the best out of our people, how to motivate our people and really linking into the capabilities that our firm is expecting to need in 2027 and beyond. So very much more than a tick box approach.

Speaker A: Do you think firms will be aware of all this? We'll have a lot of firms, a lot of individuals listening to this episode who might have heard that and think they've been blindsided to a point. Is there an expectation that firms should be up to speed on this? And if not, it's obviously not too late. What steps can they take to prepare themselves for that kind of.

Speaker D: Absolutely. And I think to some extent we're all finding our way with this. We all, and I know on this podcast we talk about it a lot as well. The speed of change at the moment is phenomenal. And for me, we're recording this in July 2026. I'm sure even in a couple of months the accounting profession is going to feel different. I'm currently on behalf of 2020 innovation, putting together our whole 2027 training offering and, um, to predict today what training accountants are going to need in December 2027. It's very much crystal ball gazing and um, I think the leaders and firms are in the same position as well. So all we can do is work on what we know today. But what I'm really encouraging the firms that we're working with to do is to look at this as a number of building blocks as such. So as I say, the technical training is absolutely the foundation. We're seeing skills changing, but people being able to understand output, whether that is output from a colleague or output from an AI tool, that is really, really important. And um, if we look at something like tax and AI, I could ask an AI tool a tax question. And uh, because I lecture tax, I read about tax, I know it, breathe it, I know every day I can look at that answer. And I've got through years of experience and um, qualifications, whatever it may be, that ability to look at that output and go, oh, that's 95%. Right, but this bit isn't. But what firms need to be building is that ability for people coming through into the profession, that inherent judgment that most of us learned through hands on experience in practice back in the day, that we've got a real challenge as to how to replicate that, when perhaps some of the more compliant routine work is going to disappear. How are we going to get those hands on skills? So we still need all the technical knowledge to enable that judgment to stand a chance. If we haven't got that knowledge, we can't review and verify output. So that is certainly one of the pillars. But then we need to look at this wider skill set that accountants will need as well. And we know this already, even though we are crystal ball gazing to some extent at the moment. And um, for me, tech and AI confidence is a big part of that. And again, I think it's a real challenge, isn't it? And we get this within our own businesses as well, that you have that one voice that is saying, try it, innovate, find that next big thing within it. But then we've also got the guardrails, the governance that's sort of creating a fear that's going alongside it. And um, you know, I'm sure you guys have seen as well, we've recently had some draft CCAB guidance out about ethical use of AI and case studies. So it's a real thing to encourage the teams to have confidence around using AI safely and securely. And then alongside all that, we've of course got the human skills, the commercial skills that need to wrap around all of that. And Richard, I know you're going to come on to human skills in a bit. And it's absolutely key. I've already touched on judgment, but communication is up there. Confidence, critical thinking, adaptability, ability to have client conversations, that's all there. But of course with all the change we're seeing, services are changing, the way workflows are delivered are changing and that's impacting our firm strategy around pricing, service design, how we attach a, uh, value to the services that we're delivering to clients. So there's so much going on that what I believe firms need to do is have a strategy that identifies all of those pillars that was technical training, tech and AI, confidence, developing human skills and this commercial platform. And the changes there too within the firm have that strategy. Identify who is working on which elements, identify where those elements impacting team members and then put training plans together from that. That should mean that the training is delivering a return on investment.

Speaker A: Brilliant. There's a few points I want to pick apart there. Shar, I want to quickly return to something you said at the start of that section in that uh, planning for December 2027 is just a very difficult thing to do. How often is that going to change? You know you have a training plan ready for next year. Is there a world where this time next year you still might be changing what people should be looking at in December 27?

Speaker D: Completely from my perspective as an owner of a training program, but also maybe it's CPD requirements for individuals. Anybody that's putting a plan together today for their next CPD year that should never be set in stone. There should be reviews during the year. Those reviews might be, hey, I've ticked that bit off. I've ticked that bit off. But what I've learned from that training is I've uncovered this whole other training need over here. So the users will update their training needs, plan, more training and then the job of those of us who provide training programs is to keep talking, keep listening and looking at these market changes and absolutely within 2020 anyway, we are putting on modules all the time. I've actually been talking to a client this morning about using AI for report writing and what training we can do with their firm, um, to support them with that. And um, that's where these sort of two way conversations are really, really helpful. Certainly what I find an issue or a challenge arising in one firm, um, they're never alone. It's something that will affect the whole accounting community.

Speaker A: Different people in different firms are obviously going to be very different stages of uh, training and they're going to Be looking after different things day to. Do you think partners, managers, juniors, new starters should be trained differently or should they all be in the same. In the same room, if you like?

Speaker D: No, I think, again, really good point. And um, yes, for training to be effective, it needs to be linked into that strategy and targeted to the individuals who are receiving it. Now, training juniors at the moment, I think is a really interesting piece and it's an area where we are definitely seeing a shift in approach. There's been a whole host of changes around apprenticeships, around looking at skill sets needed for individuals coming into a firm and indeed the volume of intake that we need every year. But for those new starters coming in, I think I touched on this earlier, they're going to need to be on fast forward, where judgment, critical thinking and so, um, on is working. And for all of us in training and for those coaching and supporting new starters within a firm, it's about finding ways to transfer knowledge that used to be gained through perhaps slower pace, routine compliance work and on the job training, where now it's, you've got this output from a tool or a piece of technology, it's done the legwork. How can that individual assess the validity of that work? So skill sets at that level absolutely need to be targeted to that. This. Fast forward to getting that uh, judgment piece. The ability to be able to confidently raise questions. Something we're doing training on at the moment is about firms building a culture of being able to speak up. So whatever level you are in the firm, you feel confident to be able to say if something is concerning you, whether that's pressure from a client or pressure from a colleague or, or concerned about a technical piece of work, whatever it may be, making sure that everybody, regardless of their experience, regardless of their longevity within the firm, has that confidence to speak up and then taking that further. With managers, with partners, we've still got, uh, that technical foundation, like I've said, but I think going forward a lot of this is going to be about review skills and the ability to verify output.

Speaker A: Great. Now culture is a really interesting point and I know it's something I'm going to come to a little later on, but let me ask for now, how do firms know that training has worked and they've avoided wasting any of their budget on it? What's a good return look like?

Speaker D: It's a really timely question. So of course something else we're seeing within the accountancy market across the UK and um, broader is the private equity movement. And uh, because of that, and just generally Good business practice there is at, uh, the moment, a laser sharp focus on profit and therefore any time that teams are taking out of chargeable or value delivering work, it has a real cost to it. So we are seeing this focus on return on investment with training. So the challenge to training companies is to do something more than show, hey, your team's done 100 hours this year, great. What have we got out of, uh, that? So it isn't about how much time has been invested, it's all about the outcome. So what we encourage our members to do is very much look at whether there's been any improvement after the course. So have we seen any change behaviour? So that might be fewer review points from a technical perspective. It might be on the personal development skills, it might be the individuals are having better, uh, client conversations, they're asking the right questions, they're intuitively listening. It might be speed of work has improved, it might be we're seeing wider use of AI, but still within that safe environment. So the issue isn't how much, I would say a training course costs, it's the time value of the individuals investing in it and making sure it counts. Last year we did a benchmarking survey at 2020 innovation and that came out that with the individuals or the firms that responded to that survey, only 31% of those firms had a written strategic plan. And coming back to the point I mentioned earlier, if we haven't got a plan, we haven't got a target, we haven't got something we can assess that training against. So that's a really important point, to have the plan and then look for behaviours after the training has been carried out and any reporting you can get around that. So a number of training platforms, including the 2020 innovation one does not only allow, but it encourages the individuals to look their reflections and outcomes when they're completing a training plan. So before they sign it off to say, this was my plan at the start of the year, yeah, yeah, I've done that, I've done my monthly tax updates, I've done my how to ask better questions training, it's not just about pressing complete. There's this, so what phase? What are you going to do with these skills in practice? And I think that really helps.

Speaker A: So big changes, a lot happening then. So if a practice owner listening, uh, to this episode, we're going to go in doing one thing, what should it be? What should those first steps look like? Some of the easier wins, if you like.

Speaker D: I think you all know what I'm going to Say to this, we need a plan, get a plan. So we need a plan. And I do appreciate that's easier said than done in some cases. And in fact, some of the training that we're doing with firm leaders is all about what that plan should look like. But the firm strategy needs to be documented and then drop down into those categories I mentioned mentioned earlier. So thinking about the technical quality we need for the service delivery, the tech and AI competence and confidence we need within the right teams, the right individuals to capture the value that is possible through efficient use of AI, those human skills that we need to be able to deliver additional value to clients and keep the fee levels up to continue growing the firm. While we are seeing technology and AI changing, perhaps some of the fundamental work and focus, um, on that commercial growth piece, pricing, timesheets, workflows, data readiness, there's a lot to do out there.

Speaker A: Wonderful, wonderful. Well, thanks for the insight, Sharon. That was great. And it segues quite nicely actually into what you're bringing to the table today, Richard. A lot of the same themes.

Speaker B: Absolutely, yeah. Fascinating stuff, Sharon. Thank you. Uh, it does nicely bring onto this next topic about relationship building because it's something which comes up quite frequently in the conversations I'm having with senior leaders at accountancy firms. It feels like relationship building is that most sought after skill suddenly now, in some ways, accountancy has always been a relationship business. Edwin's always has been a relationship business. But if anything, AIs come along and it's just accelerated. That uh, conversation just underlined the point even more that relationships have suddenly become the most important part of the job. This came up in a recent conversation I had with Chris Hyland, who is the head of Northwest at uh, aab. The firm is opening up a brand new office in Manchester, plans to scale to 200 people. So with recruitment always being kind of big perennial problem for accountancy firms, Chris certainly has a task in front of him because in order to get 200 people through the door, he needs to kind of look at what he actually wants. And AI has certainly changed that profile of an accountant. And Chris Hyland kind of said that as much when he spoke to me. He said that I see the profile of an accountant changing now because tech will support much of what we used to expect people to do. We are now expecting them to be advisors much earlier in their careers. And suddenly it's become a much more of a relationship focused business. So that kind of in the mean sense that those breaking into profession, they're going to have to become an advisor much more quickly, leapfrogging several years of training and learning from their colleagues much what Sharon was saying, there kind of that, that importance, why there needs to be that foundation within organization to make sure that they have those skills. But then there is that bigger question, that larger question, one which I've been having with some leaders, is the intake of people kind of ready for that need to transition to being more of a relationship building kind of position. Uh, are the people naturally drawn to accountancy, those people who perhaps prioritize that uh, as a skill compared to some of the other more technical aspects of the job? And one of the amusing things that I keep hearing from senior leaders is that that kind of frustration from some of their people have been kind of hidden away by the inbox rather than picking up the phone or having more of those face to face conversations with clients. Maybe that might be a generational thing, maybe that might play a part in it, that we've kind of just been learned to treat email as that, uh, first point of contact. And in some ways, you know, it is true that almost becomes impolite in order to call someone. It feels a bit rude, like you're imposing on them by calling them. And yeah, and I know kind of if I get a phone call, I look at the phone and think, who's calling me? Why are they calling me? That's a bit weird. And, and in some ways what the profession needs to do is almost overcome that kind of cultural change and that, that we've gone through and kind of revert into this more of a relationship building kind of position. And so it kind of then means that soft skills are uh, just as important as anything else. Which kind of new people coming to profession will have to learn or just naturally have. So another question is how can firms actually equip their people with those skills? And it kind of brings me on to another conversation I had recently with the CEO of Azets in the uk. He's come up with this unique idea of seconding trainees to hospitality businesses. It's not actually happened yet. I think they're in conversation with a few businesses at the moment. But he emphasized it's not a gimmick. He says important thing because hospitality businesses are incredibly great at, uh, training people to build rapport, speak to people, manage difficult conversations as they arise. And he's kind of right that those kind of skills are not something which you can just pick up without being exposed to it. And whilst they do come up in the professional environment, it is kind of putting people much more into the bare pit by putting them in a hospitality business. And there's a different kind of exposure when you're having to pull pints and deal with different people in that environment and in an environment where customer service excellence is the number one priority beyond kind of technical excellence. So there's ASETs are speaking to several businesses about this. I'm not quite sure how could businesses that are not the size of asus, whether they can kind of replicate a similar kind of thing. But surely there might be other ways in which they can maybe bring in a similar kind of approach to emphasizing his human skills. But I guess this is a question I want to throw back to Sharon because I know this is probably something that you've, you thought about, uh, 20, 20 something which listened to you just a moment ago. There's plenty of kind of that groundwork and that's already been done.

Speaker D: Well, I must admit I haven't heard of the hospitality secondment idea before, so that is fascinating. And going back to the point I made before that increasingly we're seeing firms being laser focused, um, on profit and use of chargeable time. So that is a big bet that assets are, um, making there. So it will be, I think, really interesting to see what type of hospitality business they're looking to work with because obviously for them to make that bet, they believe in the strategy. But the skills matching will be really interesting because some of the challenges we face within an accountancy environment are going to be very, very different. So while there would be some overlap, I can see that there's. Yeah, it's going to be really interesting to see that strategy play out. But the idea of succumbment into different industries, I like it perhaps beyond the customer service point because business advisory always feels like a scary topic. Like when people say, yeah, you need to move from compliance into advisory. I don't know what to say. But if an accountant is spending time in different industries, and um, perhaps we used to do that more when the audit level was lower and out and about more, you see more businesses, you learn more about business growth, you learn more about different individuals. And to come back to your point, Richard, about phone versus email, that the generation change there is absolutely notable, but it's all around social styles as well, isn't it? And I think a skill that is really key is know your audience. So when you are working with clients, it's about understanding that client's preferred communication approach as perhaps to the accountants themselves. So some of the clients would prefer an email um, we talked about that. That some people just want, you know, get on with it quick, whereas others would much rather have that personal contact. Some will want details, some will want headlines. So it's about, yeah, knowing your audience. But I'll be really, really interested to see how this assets, um, strategy plays out. It's an interesting, interesting play just to

Speaker B: kind of extend it into the tech world a little bit as well. Obviously soft skills are important, but there's also those kind of tech skills as well, that kind of to have alongside the human skills, I guess. Tom, it may mean that a different kind of person might be attracted to the profession as well, potentially.

Speaker C: I am interested by the hospitality thing. Addresses. I think, to be honest, there's some real socioeconomic issues in the profession as well, just the way that it's structured. And I would venture, shall we say that particularly staff at uh, some of those larger firms are more likely to come from privileged backgrounds where perhaps they haven't had to work throughout their training and things like that. And so you're only really socializing with the people from your own social strata, as it were. And so actually, I mean, as a graduate of the Forte Post House, where I used to be behind the bar and, uh, uh, waiting tables and things, you do learn. I mean, all human life was at the Forte Post house in the 90s, you know, from construction workers nearby to, you know, the lady managing the local Sainsbury's. You learn how to have different conversations with people, how people like to be spoken to, how to shut down a sort of traveler's wedding that's been there when it's three in the morning and, uh, you just want everyone to move out. I'm afraid I just turned off the lights on that occasion, you know, or sort of at a singles night, you know, giving this bloke at the bar advice, chat up the lady next to him, things like that. So I think, I think it is really important. Yeah. Question you asked was about technology, wasn't it? Um, I think there's a sort of a, uh, positive and a negative future. You know, I'm really hoping that we move towards this sort of positive future where a lot of these fairly menial tasks are sort of automated, you know, so you get around to tax return season, for example. Do you need to send 200 customized emails to your clients asking for their stuff?

Speaker A: Maybe not.

Speaker C: The system can do that. I've spoken to firms recently. They've used some of these large language models to spin up a vat checker or, you know, something that perhaps your working papers or something like that, and then you take over afterwards to sort of do that. I fear the negative. I'm reading, ah, Sarah o' Connor's book at the moment, uh, called We Are Not Machines. And that sort of takes a look at the sort of human in the loop approach and the sort of pros and cons of that. So, for example, coders find the AI tools really helpful because it gets them 95% of the way and then they can sort of nip in and change it. I think it was what you mentioned earlier about the tax answers, um, you get from these, Sharon, if you know what you're talking about, it's great. Slightly dangerous if not. But for industries like translation, it sounds like a bit of a nightmare, to be honest, because companies who need translation services can just stick it through a large language model and go, oh, there you go. I'm going to pay you half for what I used to pay you for translation. And actually you're just going to have to check what the machine's done, which is generally quite flat and boring and not a function translation job. And actually what might actually take some time for accountants, I think there, uh, is still. Are you gonna be set free by this stuff and be able to have these wonderful advisory conversations, or are you just gonna end up checking the machine? Checking the machine's homework? That's still slightly unclear to me, but I think from the preliminary conversations I've had, it's very early days still. I was reading an ONS survey this morning. Think like 35% of large businesses, so large being 10 employees or more. I love that definition, by the way. Ons, uh, well done. Not your sort of typical treasury definition of like, you know. Oh, yeah, small business, yeah. Round about like 5 million turn every year, you know, just knuckle. Gnawingly annoying, their sort of inability to define a small business. I'm going off topic, actually. Only 35% of large businesses actually are using AI in any greater scale of depth. So you're not behind. You need to know what's out there, you need to know what's happening. But I think it's really important to sort of customize it and sort of make it your own rather than just listen to what Bob down the road's doing.

Speaker A: I want to come back to the secondment piece because for some reason it triggered this memory I've got of Anton Deck. It's a pivot, but bear with it, Antondec, where, um, being interviewed about how they got so good at Being on live tv, because obviously they're. They're the lads, they do it really well. And it was this idea that they did children's TV quite a lot, smtv, and they were allowed to kind of make mistakes on a platform where it was okay to do so. And that doesn't really exist as much anymore. And I think it feeds into this idea of there are certain skills that you can't learn without doing them, and if you do it in an environment where you're able to make those mistakes and the consequences are a lot less serious and it could work really well. Do you think, Sharon, that we might see more kind of radical rethinks of getting people to get the skills they need? It's a really interesting idea.

Speaker D: We're going to have to. I don't know what the analogy would be because with technical services, so, um, with accounting services, you don't really have a sandbox. It's not like children's tv. We can't. For real work that's going out to real clients. There isn't. There isn't a platform to make mistakes. This is, you know, indemnified work. It's. We've got to get it right. So maybe that does link back into the asset strategy and the second piece where you can create a sandbox that's outside of the regimented world, a very regulated world of professional services. We are going to need to build this into the strategy. Something I read a few weeks ago was about all of the. Not just knowledge, but these people skills that are sitting with the partners that are looking to retire over the coming years. And, um, there's this whole wealth of skills and knowledge that's going out at the top end and how we're going to replace that through into the bottom end. So it's a great challenge. It's one that I think collectively we need to find a answer, um, to.

Speaker A: And uh, just before we move on to the, to the next piece, Richard, I want to come back to a couple of lines that caught my attention in the substack that you wrote on this in the. With it. For years, firm leaders were having. They were struggling to find the right people. And while the rise of AI might ease some of that strain in some parts of the business, it's also created this next layer of recruitment complexities. And I think it feeds into a lot of the points that have been made that firms are having to now kind of move the goalposts slightly to accommodate what that next generation might look like. It's a big Challenge for them, isn't it?

Speaker B: It sure is. It sure is. It's one which obviously, uh, I kind of speak to people quite frequently and I think people have different ideas about what the next generation is going to look like and what the particular skills they need. I think it depend on what part of the business that they sit in as well, depending on that. But I think it's going to be that big topic which we're all going to be wrestling with over the next five years as much as the topic of what would happen if Anton Deck was seconded to an accountancy firm.

Speaker C: They were seconded to Santander and those adverts, weren't they? Is it Santander or something? Wasn't it? Yeah. Goodness, I should stop watching trashy telly.

Speaker A: It was crowbar. It was crowbar at best. Excellent. Well thanks Azeri for the insight on that one, Richard. Tom, you're going to see us out uh, this week with a topic as hot as they come. Why the MTD tax return could be a ticking time bomb for accountants. Tell us more.

Speaker C: Yeah, so obviously the first mandatory making tax digital for income tax quarterly deadline is incoming. So a week and a half as we speak here and everyone's been piling in. Uh, I mean I say piling in, I think there's still 400,000 uh, people who need to register for it. But while the attention's been on that there is uh, a sort of slightly less visible but potentially more damaging issue that's waiting at uh, year end. So I guess you know, from April 2027, I mean we mentioned when we were mentioning 2027 in Sharon's bit. I mean it sounds like a scary futuristic year, doesn't it? It's only 6m months away which is terrifying. But yeah, as I speak there are more than 100 software products on HMRC's list. Some of which are those we know and love, um, or know and grudgingly work with. But some of them are sort ah, of newcomers to the scene, should we say. Some sort of stripped back simplified entry level product, some of the bank based MTD tools and some of them are just designed to file those quarterly tools, um, and they lack a suitable place for users to record transactions that are excluded from quarterly updates but still need for that annual tax return. So sort of lack a full chart of accounts, customisable nominal codes instead. These new tools provide just those expense categories that HMRC set out for those quarterly updates. And Samantha Mitchum, founder of SJCM M Accountancy, ah, got in touch wanting to Chat about this. While this sort of streamlined structure does help to keep the uh, quarterly submissions fairly straightforward, it does create a blind spot for the annual tax return. So those non quarterly transactions, your fixed asset additions or mortgage interest that don't have a natural home on those simplified platforms, when clients are going to put them in, obviously they're not sure where they should be putting them. The software will just say non MTD and it then disappears. And so your accountant then has a sort of a rubbish treasure hunt at the end of the year trying to piece everything together. So she was working with a client in the 202526 MTD testing program who'd bought a van. They weren't quite sure where to record it on this MTD software and was told by the software provider to uh, park the van under non MTD items. So uh, yeah, I'm glad you like that one. So when they encounter these transactions, they tag them as non mtd, dump them into personal drawings, whatever. It removes them from the uh, quarterly MTD update. But again it leaves accountants with that game of hide and seek. You could be missing valid capital allowances, leaving those fixed assets buried in repairs or renewals. Uh, or you could just be going back to order every bank transaction manually. I mean it sort of depends how you set your firm up I guess. If you've demanded like a lot of awe breeders, it's an all or nothing approach. Like we either do the quarterly submissions and the final tax return or you've just retired, you know, bully for you. But some people are just having that final tax return service line available. So it is a bit of a ticking time bomb to be honest.

Speaker A: How has the year end emerged as a bit of a blind spot here, Tom? Um, what's been overlooked and by who?

Speaker C: Um, that's a good question. I think it comes down to accountability really. I mean HMRC have been very clear from the beginning. They're not building software, they built the backend, they built the APIs. I've had a good go at trying to describe APIs over the years. I think the best thing I came up with was a sort of train analogy where HMRCs built the platform and the rails and the software provides the chain engines.

Speaker A: Choo choo.

Speaker C: But uh, yeah, I think that actually in this case it's sort of HMRC have said, well, we've done this, we've laid out the categories for the quarterly submissions. I have a feeling, and hopefully Sharon can correct me on this, that the final tax return is a sort of different legislative Beast to the MTD quarterly submissions. And so it's kind of slid in through the gaps. The new software said well we're ticking all the boxes, what's the problem? And the client doesn't know what they don't know. It's the sort of Dunning Kruger effect in action in tax. And so yeah, everyone's just kind of left it to everyone else and uh, the accountants are going to have to ride into the rescue.

Speaker D: It's very much been segmented as two separate processes really hasn't it? Um, whether that's workflows, ethical procedures, we've got the course of the updates and then separately we've got this, this year end process and um, most firms are not there yet because it's going to be well it could be as late as we think 2027 scary for some. This could be January 2028. This is still going up, couldn't it? Um, so it's really good that there are firms um, like um, Samantha's and others out there that are now actively testing that 25, 26 year. And um, the piece I'd layer on top of this while we're doing a bit of pre Halloween spooky scariness is the current consultation around timeliness of payments. And while it is just a consultation we've kind of got HMRC saying well yeah, should those in self assessment be paying their tax sooner? Uh, based on whatever information you know, we may or may not have. We're not joining any link. Yeah, so these very draft quarterly updates, we don't know at this stage but yeah, the fact that they do omit capital allowances, private use adjustments, those mortgage interest adjustments, whatever it may be, it could be year end issues and beyond.

Speaker C: Yeah. And I think HMRC have come up with many reasons over the years for making tax digital but I think that accuracy, improved accuracy and closing the tax gap was one of them. And I'm not sure, you know, combined with Lucy Cohen's thesis uh, that I talked about a couple of episodes ago around AI coding of transactions, you know I think sort m of slightly undermines that uh, still further.

Speaker A: And a quick question then Tom, to uh, see us out. Is there a fix for this? Has anyone come forward and said look this is a way we can get around it? If HMRC responded, talk to us about that.

Speaker C: I'm glad you uh, asked. Yes, no, um, Sam did come up with a fix. So it was relatively straightforward, you know, just these softwares to have a sort of year end items category for those transactions. I mean it's not going to completely solve the problem. They'll still be there. But actually, I think something that, uh, at least something that labels them will help with the treasure hunt, as it were. I mean, perhaps HMRC could mandate it. I don't know, uh, if that requires sort of three sittings of the House of Lords to actually get that one through. But, um, it still wouldn't send those transactions to hmrc, but it would mark them, you know, there. So I don't know. It is an issue, uh, uh, that actually, um, people coming in and seeing an opportunity. I think a lot of software developers look at the world of tax and just think, oh, that's great. It's just numbers and standards, isn't it? We can match them up and really fail to see some of the subjectivity in there. Which again, I mean, it's a perennial issue going back to the first tax softwares really, isn't it? But, um, it's one that I'll run and run, I think.

Speaker A: Smashing. Really interesting. Thank you, Zoe, for the insight, Tom. And that's all we've got time for this week. A big thank you to 2020 Innovation for sponsoring the episode and also to your good self, Sharon for coming on the show.

Speaker D: Thank you. It's been great.

Speaker A: It has. It's been a lot of fun. It's been a lot of fun. Join us next time for a look at all the big goings on, but until then, take care.