Making Tax Digital - The big opportunities

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Making Tax Digital will be one of the biggest opportunities the UK profession has ever seen.

As I discussed in my previous article, in New Zealand the profession has had its version of MTD since 1986 when GST (VAT equivalent) and bi-monthly reporting was introduced. In Australia GST and quarterly reporting was introduced in 2000. For 31 and 17 years respectively the ANZ accountants have ‘known the numbers’ of their clients every 2 or 3 months – not just once per year.

Once both countries got the hang of the reporting requirements and the workload involved there was a boom in business advisory services. And of course, a boom in gross revenue.

The reason there was a dramatic increase in business advisory services was because the accountant knew the trading numbers of the client every 2 or 3 months. They could offer numbers based advisory services with more accurate data in front of them.

The real opportunity is not to do more compliance work but to add value to the numbers on those two or three screens on your desk. If the numbers are up to date and more accurate the accountant can add a tremendous amount of value.

Where is the value in annual historical accounts preparation? It is very hard to add value to data that is 3-18 months old. It is old, dead, redundant data. Annual compliance based reporting (which represents 87% of the globes accounting revenue) offers very little value to the client.

Because of more accurate data that you’ll have access to every three months, MTD enables you to move into a range of new ‘numbers based’ services.

You see, because of MTD, your clients will be forced into more accurate bookkeeping and better systems. As a side note, now is the time to insist your clients get onto a cloud accounting platform – or their fees will sky rocket.

Only 7% of the UK small business market is on one. In Australia, its 30% and New Zealand has 50% of all small business clients on a cloud accounting platform. Your market is about 3–4 years behind us. When your client is on cloud accounting, it’ll be easier for them to do the record keeping and easier and faster for you to process the data.  

If they don’t switch over to a cloud platform then the workload on you will be immense. You’ll need to hire many more people to do the volumes of new work – not a good profit strategy.

With all this new data at your fingertips, what are you going to do with it? I think you have a duty of care and deep obligation to advise the clients how to improve their numbers. If you are living by the mantra to ‘provide every service to every client that helps them achieve their goals,’ then it’s not selling new services—it’s servicing your clients properly.

Here is a list of 14 services that you could offer:

  1. Cash flow forecasting and analysis
  2. Profit improvement program
  3. Monitoring and accountability program
  4. Debt restructuring
  5. Capital raising
  6. Interest reduction service
  7. Waste audit
  8. Revenue improvement strategies
  9. Creditor analysis and negotiation
  10. Product profitability analysis
  11. Receivable management service
  12. Tax planning and tax minimisation
  13. Business planning
  14. Inventory management system

All are valuable services that will make a significant impact to your client’s financial future. All these services are very valuable to your client and they should be priced based on value based fees – not time-based billing.

By ‘staying close to the numbers’ you have a better chance of the client buying the service. You’re known for your numbers, your clients expect you to be good with the numbers and you know how to positively alter the numbers. Also, with good systemization of the services, you can have accountants of all levels deliver the service—not just the partners. That’s the ultimate leverage.

An accountant has an enviable stature in the community of being the trusted adviser. My definition of an accountant being the trusted adviser is that all clients are buying every service they need that helps them achieve their goals.

Are you actually going to be the trusted adviser or are you just going to do what the government mandates you must do – the bare necessities of compliance reporting?

Your opportunity with MTD is to not help your clients write up more history. Your opportunity with MTD is to help your clients make history!

About Rob Nixon

Rob Nixon

Rob Nixon has been advising accountants all over the world for the past 23 years. He has met over 170,000 accountants from 30 countries. He has coached 800 to success. He is the author of 2 bestselling books “Accounting Practices Don’t Add Up” and “Remaining Relevant”.

His 3rd book “The Perfect Firm” will be released this month. He is the Founder & CEO of PANALITIX – a membership organisation of 650 leading accounting firms around the world. PANALITIX helps accountants build great businesses, so that they can build great economies. For membership enquiries or for more information go to or


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04th May 2017 14:09

Hmm... 4.2 million of the 5.5 million UK businesses employ nobody but the owner. That is to say they are self-employed individuals.

How many self-employed clients (read plumbers, designers, hairdressers) will want and pay for the services listed 1-14 above?

The "you can replace compliance income with advisory income" suggestion is the biggest misconception in the accountancy industry today.

There, I said it.

Thanks (5)
to Adrian Pearson
07th May 2017 21:27

I think you have it Adrian.

Advisory maybe applies to maybe top 10% of most firms client lists.
Some may require one offs from the list from time to time, but the suggestion that the smallest of business are all of a sudden going to want huge amounts of advice now their books are completed more regular is a nonsense.

Products like Crunchboards to me are not what I would class as good advisory tools they are just enhanced reporting that presents figures in a more user friendly way that stat accounts. For me they are very much advisory lite.

Thanks (2)
08th May 2017 05:51

It is actually worse than that folks. See my numerous posts on the fundamental weaknesses of the cloud products I have used, as run by "click and post" clients who came to me having fallen for all the glitz.

Later this week I will be issuing a £300 variation - on a £500 fee - to a client who assured me her stuff balances to the bank. Except that it is £15k adrift from the bank statements on a £50k sales business.

Beneath all the flashy charts lurks a pile of manure. Over time this will surface and become apparent to the "click and post" folks.

Thanks (4)
08th May 2017 16:15

The big firms will be busy with this type of consultancy and legal defence see top FTSE action. It's just jobs for the tax man really. Any business that invests in staff and software have all of the above covered. The 1/4ly return of the dog walking firms will have a hit as they add accountancy costs for the first time as they spend more on accountants than of pooh bags. Where is the added value?

Thanks (0)
09th May 2017 08:13

I can see where post responders are coming from here, really I can.

However it's not all pessimism for the small clients it just requires some more creativity and simple advisory services.

Good examples can be things like:

- overdraft interest, how many times have they dipped in in the last quarter, could they avoid charges or interest?
- tax estimates, a quarterly rolling estimate of ct, vat or pt liability perhaps
- incorporation advice
- tax advice like income splitting with partners etc
- benefits advice, child etc

In general everyday stuff could prove valuable and is easy to prepare. That is before you look at every day problems which I will try to give a relevant example below.

Plumber - often has poor cash management resulting from lack of time to do invoicing and buying parts upfront for jobs. Most lack ability to take card payments either. Solution is online/mobile invoicing with a payment solution, don't leave the job until invoices or paid and do it from the van! Track unpaid invoices with ease and chase not cr*p themselves once a month/quarter and go on a chase up drive. Issue quotes online and possibly job deposit invoices also to cover any parts upfront or just 25% down depending on size of job. Ask for credit terms from wholesalers and track the bills/ap from this to manage that side better. That is before receipt and mileage claim possibilities also.

So in summary simple clients need simple solution which most out the box cloud systems can deliver as long as an account inspires, educucates and helps deliver.

Just my 10p. I personally find those things more rewarding than compliance and have found they can drive client loyalty and referrals as a result.

Thanks (0)
to NLB
09th May 2017 09:24

Hi, yes, of course there is always advice that can be given - even to the smallest and simplest of clients.

But will they pay for it? And will they pay enough to cover lost, bread and butter accounts and tax return work?

A plumber with a £400 fee for a simple accounts exercise and tax return would be unlikely to pay the same £400 for the advice you mention above, I would argue. Especially when it's increasingly the norm nowadays for firms to provide advice free as part of a fixed price compliance service.

Advisory work is more interesting and is valued by clients but I do not personally believe that the compliance fee base in a typical small accountancy firm can be replaced with advisory fees from the same clients.

Thanks (0)
to Adrian Pearson
09th May 2017 09:45


I don't think it is binary to replace the fee income and the article does not suggest that and neither do I having tried in practice either.

Clearly one can lay down a business case for a client for more advisory services and they can take it or leave it or you can incorporate elements within a fixed fee arrangement per month...39/49/59 for the current 400 annual client you mention.

Existing migration is harder work than new clients from my experience but starting having an offering, believing in it and having a go must be a good idea mustn't it? Free trials and tasters always seem to help so they can 'see it' before they buy it.

In summary it is a tough journey, create something and try 3 times with a client over a period to get them onto it then consider churning them in favour of more of the type of clients you want (& that want you)

Thanks (0)
to NLB
09th May 2017 11:01

@NLB - I can see where you're coming from, BUT (big but) things like mobile payment devices for plumbers (iZettle is excellent) should be standard advice offered rather than an advisory add on.

Suggesting cloud based software to do their invoicing on the go to avoid delays in billing - again should be standard practice.

There is free advice (standard) and there advisory work - don't confuse the two with Accountant Guru babble. Plumbers don't want advisory but they often want simple (free) advice.

I don't go for the try before you buy or if they don't like it sack them (churn) options.

Set out you offering at the start and price it accordingly - so if you charge £500 for a plumber (Adrian's example) and offer as standard some advice, do that at the start. Don't take them on at £400 and then say if you want X and Y the price is now £500 - be clear from the start.

I also know its far easier to keep clients and deal with them after clearly setting out fee and service levels and expectations rather than having a high churn rate when a client won't buy the services you want him to.

Only work with those clients you want to. Pricing should be transparent.

With the impending MTD it is now more important that ever (IMHO) that you set out pricing clearly.

Thanks (0)
to Kent accountant
09th May 2017 11:47

Hey Kent A - not here to convince anyone, everyone can adopt an approach they are comfortable with.

Advice is still advice whichever badge you put on it so the big BUT is the very fact most tradespeople in the example we are using are not on the cloud and are not using payment services is testament to how much potential 'advice' is either not being given or the opportunity to give it. Which given the wide availability of those services and the number of accountants dealing with these type of clients means most are not including it in their 'standard' advice package or simply not executing or simply not aware.

My view is that if that helps them have a few more grand cash a year in their pocket and paying a small % of that to enable and support it is reasonable for both.

I agree with pricing transparency, I hope you didn't infer from the post anything else however I do think you are wrong in saying that a client always has to pay the same fees year in year out. Limiting for client and practice. Clear packages and options allow a client to join or upgrade from bronze to silver (etc etc) if they wish and pay more to get more at any point, nothing wrong with that. I personally find once clients experience the other packages they have a good tendency to want to stick to them if it delivers value. Fly business class and suddenly economy is not very appealing! - bad example but you know what I mean.

Clearly if trying to square the circle of fees/work and the client is not paying enough and won't then churn is a viable option but I agree don't take them on if you think it will end up that way and don't sell them a low price if you can't sustain it, all very basic client management fundamentals which most stick by I should think.

Lots of change on the horizon with cloud, MTD, brexit so plenty of opportunity for all to step up and service what is a big market at the end of the day.

Thanks (0)
09th May 2017 13:39

Hmm this thread brings up some interesting comments.
I fall into the camp suggested by Kent and Adrian.

I have spent time developing systems for certain cleints types and that allows me to do the fixed pricing. I have a system for restaurants & bars, contractors etc. Things like using a card service for the plumber is just part of setting him up right with a system that will work for him, and not specific advisory work nor is incorporation advice.

What is touched on by the OP is the bolt on advisory tools that we are led to believe will transform even the smallest of practices into the big time.

Tools like Crunchboards and Spotilght added onto a Xero core package to give advisory services would have us believe that we can charge a lot more to the client, these bolt ons have a cost but once set up do not take much time to bang out to clients.

What I would be keen to see from those big on the advisory is the effect on fees it has.

For instance a decent silver level client for me would pay around £300 per month. For that he would get Xero + RB + quarterly report pack from Xero + on going phone and email support.

If I add on Spotlight or Crunchboards to that where do the fees go, do you get an extra £50, £100 £200 per month for what this brings.

We are led to believe it is much more than the above but I remain to be convinced. I have been producing single sheet flash reports in Excel for years, which is all these are just they take less time to do.

MTD for many will just mean they give there books to there accountant more often than they did before. Those who have decent systems now will not really be effected that much, as really all they will have to do is submit a more detailed VAT return.

Setting up people right with the systems they need to trade smoothly is something we should all be doing without the push from MTD

For me the opportunity in MTD lies with the person who can come up with an efficient way of supporting the sole trader without a massive increase in costs.

The Taxi driver who pays £300 now is not going to pay £900 for his accounts under MTD.
The person who can crack this and bring the cost in at say £450 will clean up this end of the market and I suspect this is where the online contractor accountants will focus as I suspect the contractor market will shrink over next few years and they are best geared up to fill the no frills gap for the lower end of the market.

Thanks (0)
09th May 2017 17:16

Hi again everyone.

I can see the merit in much of the comments of all parties here and I certainly did not intend to suggest that there are NO opportunities to provide advisory work.

Nor do I wish to belittle anyone's efforts to advise clients on new ways of working - and generate fees from doing so. This is exactly what we should be doing.

But I refer back to my original reply and ask again: how many of the "magic bullet" services listed in 1-14 by Rob Nixon would the vast bulk of your self-employed customer base want and be willing to pay for?

Thanks (0)
09th May 2017 17:50

thanks for getting us back on course around your original point Adrian.

my answer at least is 'limited' perhaps 7&8 have simple applications to the sole trader.

there is a tendency for suppliers when talking advisory to be talking about Ltd companies by default and not the tiny ones or contract ones also which is a much smaller market clearly.

As Glennzy said for sole traders if you can crack the model for doing a lot more for not a lot more due to systems, processes, scale then there is a prize there.

@ Glennzy, personally I don't do any sole traders so can't comment on that group but have been able to charge primarily within the 50-200 range for custom reporting depending on scope and inclusion of budgets/comps etc. At the lower end of the client base bundling simple reports with other services like bookkeeping works well.

Thanks (0)
10th May 2017 22:14

I tell you what EVERY SINGLE fancy chart these systems produce for my client base - which admittedly is only 4 on the cloud - is a pile of manure.

What use is your cash flow projection when your bank statement is £15k different to what is in your accounts?

What use is your VAT return payment when all the stuff you posted this quarter dated the previous quarter has been missed off?

What use is your debtors and creditors to pay chart when it includes bits and pieces of your own loan account because you have set yourself up as both a customer and a supplier in your stupid bludy system?

Thanks (0)