FreeAgent poll reveals that only 1.2% of practice clients are prepared for MTD
24th May 2021
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Award-winning software provider FreeAgent conducted a poll* of accountants and bookkeepers to see whether their clients are prepared for the next stages of Making Tax Digital (MTD). The poll revealed that only 1.2% of practice clients are fully prepared for MTD while 48.1% are not prepared at all.
FreeAgent has compiled the following top tips to help you equip your clients for the next stages of MTD.
Introduce your clients to MTD
If you haven’t yet introduced your clients to MTD, consider reaching out to them as soon as possible. Here’s a quick rundown of the upcoming deadlines and who will be affected.
MTD for VAT
HMRC will expand MTD to all VAT-registered businesses with a taxable turnover below £85,000 from April 2022. To help you introduce MTD for VAT to clients whose turnover is below the threshold, we’ve compiled this handy guide. It explains what MTD is and how it will affect the way taxpayers report information to HMRC, with specific information on MTD for VAT.
MTD for ITSA
MTD for Income Tax Self Assessment (ITSA) will require self-employed business owners and landlords with annual business or property income above £10,000 to follow the MTD for ITSA rules from April 2023.
We recommend that you communicate with clients affected by MTD for ITSA in as much detail and as often as possible. You may decide to publish social media updates and blog posts about MTD or host webinars to address any clients’ concerns directly.
To give you a head start, we’ve created useful email templates in our practice preparation guide to help you familiarise your clients with MTD.
Inform clients about the benefits of digitising their records
Clients who maintain digital records can streamline their processes and get a better overview of their business finances than those who don’t. Keeping their accounts in order throughout the tax year should help your clients to avoid having to rush to meet their filing deadlines.
By viewing the same data as your clients in real time, you can help them to avoid data entry errors and provide them with accurate business advice, giving your relationships a boost.
Familiarise your clients with accounting software
While some accountants and bookkeepers may view MTD for ITSA and the shift from annual to quarterly filing as an increase to their workload, this isn’t necessarily the case. By encouraging your clients to actively use accounting software, clients can tackle and even automate many of their own admin tasks, saving you time in the process.
With FreeAgent, your clients can set up a bank feed so all of their transactions are imported from their bank account into their FreeAgent account automatically. Using the mobile app’s ‘Capture for later’ feature, your clients can snap pictures of their receipts and store them in the ‘Files’ area of their FreeAgent account. Clients can also explain their bank transactions using both the desktop version of FreeAgent and the mobile app. Our client churn data suggests that those who use the mobile app are more proactive in keeping on top of their finances.
Looking for more information on the next stages of MTD? Check out our MTD hub for additional resources.
*FreeAgent poll of 260 accountants and bookkeepers.