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Create a digital vision to make MTD work for youby
In the first part of our ‘Taking control of Making Tax Digital (MTD)’ series in association with Dext, we’ll explore how you can make your digital transition work for you and your clients.
Over the next few months, we’ll be publishing five articles aimed at giving practitioners the confidence and skills to ensure that their practice and clients are ready for the opportunities and challenges that MTD presents.
MTD for ITSA is going to happen
In spite of the recently announced delay until April 2024, HMRC remains committed to Making Tax Digital in its efforts to drive technology adoption among businesses, the self-employed and landlords. With the announcement that business owners and their advisors will have an extra year to prepare for the digitalisation of income tax, now is the time for practices to actively engage with the change management process.
While the shift presents challenges for firms, it will be those who proactively prepare their teams, clients and processes that will be best placed to succeed. This starts with creating a digital vision for your practice.
The roadmap to digital
While the practical details and goals of MTD are relatively straightforward - digital records, linked data and online submissions - the impact on your practice and the way you make the transition is up to you. There are a number of ways in which your business can comply, so you need to carefully evaluate your options in the light of what you hope to achieve.
The advent of MTD for VAT has greatly increased awareness around digital tax, online record keeping and automation via accounting software. The move to include non-VAT and income tax customers in the scope of digitisation is a chance to apply the benefits of technology across your entire client base. Key changes include:
- Data quality improvements: According to HMRC, two in five (44%) businesses agreed that the transition to Making Tax Digital has had a positive effect in terms of keeping on top of their business tax liabilities and confidence in using technology. Moreover, moving your team to quarterly record submission will increase the currency and completeness of your available client data.
- Reduced compliance time: The same government research found that for 55% of businesses, Making Tax Digital made preparing and submitting VAT returns faster, especially among those using fully compliant solutions.
- More client contact: Submitting on a quarterly basis will require working more closely with clients to build faster, more effective processes that can drive regular data collection without significantly increasing work for your client or your team.
These shifts provide the possibility to fundamentally change the way you work. Every accountant has wished for more time, better client relationships or better data at some point in their practice – now there is the chance to make that a reality.
What you want to do with it is up to you – you could bring on more clients with the time saved, offer new services or just work more closely with your existing customers. Once you have selected your desired goal, you can then start building a plan that combines continued compliance with the steps towards your personal goals.
As a trusted adviser, your plans must first and foremost satisfy the needs of your customers. The goal of the digital transformation is to help them be more efficient, compliant and successful, and if you can’t bring them on side then your plans are unlikely to get very far.
That’s why it’s important to bring your clients into your planning process so they can play an active part in helping you achieve your goals.
Communicate in advance
Even before you have created your plan, it’s essential to let your clients know that you have plans and are working on this issue. Any period of uncertainty can be a worry for clients, and if you don’t let them know you’re in control of the situation, there is a chance they may look for reassurance elsewhere.
Create your target client profile
While you are rethinking your processes, it’s important to actively consider what problems you will be solving for clients. It can be hard to build a compliant process that will apply equally to all clients, business types and levels of technology-sophistication. Instead, think of which client issues you enjoy solving and what type of businesses you enjoy working with. This enables you to build your roadmap with a target client in mind.
Map your value
Once you have your target client in mind, you can then decide what role you want to play in helping them. Some firms might want to focus on making compliance as painless and easy as possible for as many clients as they can, others may want to use this as a chance to dig further into business advisory. Either way, create a list of the ways you want to help your clients and the outcomes you want to drive.
Plot your roadmap
With a target client and value set in mind, you have a goal to build towards.
- What are the tools you will need to deliver the service you have in mind?
- How many clients will you need to make this financially viable?
- What new capabilities will you need to add to your business, either in terms of training, new hires or external support?
- How will you plan out these changes in the time available to achieve compliance?
We’ll tackle these challenges in future articles.
Communicating your vision to your team
Your team is essential to making your new vision a reality. While the move to MTD is mandated by HMRC policy, you can improve motivation and engagement with the process by aligning the interests of your team with the process.
New ways of working have the scope to reduce manual work, introduce new roles and technology and build close customer relationships. This is a huge opportunity for your team to learn new skills, devote more of their time to more value-add work and take on more client-facing tasks.
By giving your team responsibility, accountability and visibility in the process, you can help them become active partners in their own future, a topic we’ll explore further later in this series.
Take control of your future
At Dext, we’re helping thousands of firms create future-ready processes that benefit clients, owners and the bottom line. No matter where you are on the journey towards compliance, time-saving technology, support and advice are always available from our expert team.
Read the other articles in the 'Taking control of Making Tax Digital' content series.
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I joined Dext as a Product Domain Expert in January 2021 having spent the previous 21 years in practice where I was a partner heading up the firm’s cloud accounting offering. ACCA qualified since 2003 I led the firms MTD and digital strategy, submitted the first-ever VAT return under MTD in the UK with QuickBooks, and provided support on...