Devise a client MTD calendar for your practiceby
From AccountingWEB members' comments, it is clear that the vast majority feel the same way as jonmst2 in his 'MTD - feeling of impending doom!' Any Answers post.
"I'm not sure if I am going to have the capacity to cope with this."
The delay has bought us some time but as we know - time flies. The only way to reduce the 'feeling of impending doom', its impact on practitioners, staff as well as clients is to set goals and deadlines for communication. For example, Sage has a helpful timeline of future MTD update submissions as a starting point in their client facing MTD guide.
When to start
Despite minimal detail given to the general public by HMRC to date, practitioners have been aware of the intended new system for a while. Although HMRC has said that there will be a major multi-channel communication campaign, it’s likely that accountants will need to be heavily involved in educating their clients about the new rules and their impact.
Some accountants may have been wary of telling their clients (possibly hoping that MTD will go away), whereas others have made sure that clients at least know what the letters 'MTD' stand for, others are further down the track and feel confident that their processes will cope.
If you are one of those who are not convinced but you still intend to carry on with your business, then processes need to be implemented as soon as possible.
From the spreadsheet of clients suggested in article two in the series, you should have a good idea of which clients will need more help than others in the transition. Whether you have started advising clients or not, 'drip feeding' and continual reminding is the way to go.
Dec 2021 to Jan 2022
Clients for whom tax returns are being submitted in the next few months will not be interested if you start talking about MTD in detail and if you tell clients that the starting date is over two years away they will turn off, as to them that it is a long way in the future.
However, explaining that 'a new system' is coming in and giving the basics will at least mean they are aware that something will be changing. Tell them that they will be hearing a lot more about MTD in the future and as such they need to be prepared. Ask those clients who just give you totals to send you their spreadsheet background information, if only to set the scene.
Feb 2022 onwards
When the January rush has died down, spend some time creating separate one-page 'information sheets' for each type of client explaining how the system will affect them or not (people 'turn off' if the text is longer than a page) and stress that timely submission of information is paramount.
For those who will have to file under MTD ITSA, advise that you will be in contact to discuss the transition and (try) to make it as straightforward as possible. End by saying that you are monitoring announcements from HMRC, and keeping up to date so that you can help them through the process.
Before contacting any client you will need to decide your strategy and work out your internal processes. To keep your costs down, you will likely be looking to do the minimal effort to support the legal requirements which, in reality, is likely to be to get as many clients as possible onto a cloud-based accounting system to use themselves, as unless you take on extra staff you won't be able to do everything yourself.
It may be an opportunity to start to offer in-house (or outsourced) bookkeeping to clients. Some clients will want you to do everything, others will want to be involved and others will just turn off.
Talking to each client will help you plan your processes and how the information will flow through to you. Those receipt-based clients can be directed towards such programmes as Auto Entry or, if they cannot use these then your staff could learn the software. Create a standard spreadsheet and investigate bridging tools for those clients who will be more comfortable using spreadsheets rather than complete software.
Clients who will not be affected
Clients who will not be affected by MTD need to be advised of this separately. You should make a diary note (or automatic email via a Practice Management system) to confirm that they are still outside the MTD scope at six monthly intervals, which should reduce the number of calls asking whether they are affected the nearer the date of implementation.
Computer literate clients
Your segmented list of clients created as recommended in my previous article should give you an idea of those who already have or should have separate business bank accounts. Time will need to be set aside to contact these clients to discuss the best way forward for their business. This could include:
- setting up bank feeds
- 'invite' or CSV import into your software
- using bookkeeping or accounting software themselves, or,
- a spreadsheet and bridging software.
You probably shouldn’t try to contact all your clients in one go, but rather spread contact over a few weeks or months as that way they will be getting a personal service and you won't get fed up with saying the same thing. Follow up with an email confirming what needs to be done as proof that the discussion has taken place.
March 2022 onwards
The majority of clients have a 5 April year end (may need to move their basis period) and any who will be recording on a spreadsheet should be helped to do so from 6 April, others as their year end arrives.
Those you think will be capable or will want to use cloud software in any form will need to get used to the idea. Include on your schedule a suggested date of getting software-using clients onboard spread over the next year. You want to get everyone on their way within the year.
You’ll need to make sure that your clients understand that whatever HMRC might say - this will cost; the cost of software and your cost of training if that is the route you intend to go down.
By creating the segmented list of clients, understanding the impact on each segment and how you are going to advise them as suggested in article two, you should have an idea of how much time this will take out of your working life. If you have staff, you could consider appointing one to be the coordinator of issuing information to clients.
If you do not have staff or have a small number then the use of virtual assistants or purchasing of a practice management system that automates the sending of emails and chasers will reduce the time spent.
Unless your firm or client uses one of the software programmes listed under Find software that's compatible with Making Tax Digital for Income Tax on Gov.uk then currently you should not be moving clients onto the pilot.
Having spoken to as many clients as possible you will know which might be ripe for joining the 'pilot schemes' - those clients already VAT registered will probably be more comfortable initially. The current requirements are restrictive so you may find that not many can apply, but those who can should be encouraged - tell them that it will help transition and help you to get your systems in place.
The problem with the 'best-laid schemes' is that they don't always go smoothly. Clients will have other things on their minds than an event far in the future. You can only guide and cajole up to a point and then more forceful steps will need to be taken should any client fail to comply.
This article is the fourth in a seven-part series from AccountingWEB sponsored by Sage. You can access all of Sage's MTD resources and support on the Sage MTD Hub.