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Create a digital vision to make MTD work for you

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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.  

16th Nov 2021
Product Domain Expert Dext
In association with
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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.

Client-focused change

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. 

Get in touch with Dext today to find out how you can take control of your future.

Read the other articles in the 'Taking control of Making Tax Digital' content series.

 

Replies (10)

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By ireallyshouldknowthisbut
17th Nov 2021 15:55

let me correct that for you.

MTD for ITSA might happen - if its not cancelled like the HS2west coast route, which was absolutely going to happen, no questions, until it wasn't.

But we don't know when

And we don't know for whom

Or how, crucially, how it will be enforced.

All we know is its not for a couple of years yet and keeps getting put back and back and back and back. And back again. And the spec keeps changing.

And what we do know is accountants who forced their client onto unsuitable software in line for the original dates 3-4 years ago have now costs their clients thousands of pounds in unnecessary work and fees, and many of those clients are jumping ship to firms like mine which are taking a practical approach to this matter.

Of course for clients who benefit from better software, we are already doing that completely independently of MTD on a business case basis.

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By GHarr497688
17th Nov 2021 19:13

it's a national disgrace that this was supposed to be introduced in 2019 and now the planned date is 2024 - 5 years later. How can anyone make decisions when HMRC keep moving the goal posts. I am fuming about the stress and anxiety caused to many . Even now their is no clear plan or guide.

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By Hugo Fair
18th Nov 2021 00:37

I'm sorry, but this article is like Ernie Wise's wig ... you can see the join (in this case between the copied bits from HMRC and the marketing claims from a software vendor).

First, the complete lack of verisimilitude in HMRC's 'survey stats' - which have been exposed over and over as at best based on a non-scientific sample and at worst as responses 'encouraged' by deliberately worded questions.
There is no quantifiable evidence out there to show MTD having either "a positive effect in terms of keeping on top of their business tax liabilities" or "preparing and submitting VAT returns faster" for any substantive proportion of taxpayers.
I can well believe however the 3rd point that "Submitting on a quarterly basis will require working more closely with clients" - without however seeing how this will lead to a promised saving in time for agent or taxpayer!

The other half of the article? Standard 'motherhood and apple pie' stuff, without any particular relevance to MTD or indeed to the sponsored software.

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By mikeyban
18th Nov 2021 09:27

MTD has worked so far as the VAT registered have systems in place so it would never have been a problem to tweak these types of client.

The sole trader butchers, bakers and candle stick makers ( subbies, mobile hairdressers, taxi driver) some cannot barely use a computer .... this is when the fun starts.

Any strategy a practice has can be summarised as extra hours for the accountant tearing their hair out.
It will be a car crash.

There must be an easier way to give HMRC quarterly payments on account ?

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By johnjenkins
18th Nov 2021 10:04

First Sage, now Dext, QB advertising like mad. Methinks software companies are getting a little worried that SME's are not doing what they want them to do and consequently they are not getting the return they expected. It is now a good possibility that quarterly updates will either be shelved (I have no doubt HMRC will try and bring them in at some date, maybe after the next election) or re-vamped (although there is not much to re-vamp). My personal view is that QU will be quietly forgotten with Accountants having to declare that clients are using a digital system. If business file their own then they will have to self declare that they are using a digital system.

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By Peter-S
18th Nov 2021 12:19

I love stats! 44% agreed is a positive? so 56% didn't agree and we'll quietly ignore the fact that that is over half.
And the 55% saving time IS significant and the 45% who didn't is not?
The split on these two quotes is basically the same and they are both favourable to MTD - how? 44% positive is good but 45% negative is not relevant.
And I can spend loads more time with my clients. Great. Am I doing this for free or will they be paying me for loads more work that I will magically have the extra time for. What a load of tosh. IMHO.

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By Mr J Andrews
18th Nov 2021 12:32

How many more Plugs will Accounting Web produce spreading the HMRC propaganda.

How about some balanced reporting ?

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Replying to Mr J Andrews:
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By johnjenkins
18th Nov 2021 12:45

They get that from our comments. Not that balanced though.

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By BryanS1958
18th Nov 2021 12:45

We don't need a Digital Vision, what we need is a bit of common sense on the part of policy makers. There is no sense in forcing landlords and small businesses with less than £85k turnover to file quarterly.

It is also not obvious how either HMRC or taxpayers will benefit from filing all the data. HMRC does not have the resources to cope with the current level of data it receives. Supplying the data will be of zero benefit and a significant additional resource and monetary cost for most landlords and small businesses.

I suspect it is highly likely that there will be insufficient bookkeepers and accountants available to take on the work, especially if clients only expect to pay the additional £3-185pa (https://www.gov.uk/government/publications/customer-costs-and-benefits-f...) that HMRC seems to think the additional work will cost (that includes the cost of software, such as Dext!).

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By Alfonso2255
23rd Nov 2021 05:00

Thanks to this article I can learn more. Expand my knowledge and abilities.

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