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Devise a client MTD calendar for your practice

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Jennifer Adams looks at how to develop a client MTD calendar for your practice in the fifth instalment of our Countdown to Making Tax Digital series in collaboration with Sage.

6th Dec 2021
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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. 

'Pilot schemes'

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.

Replies (24)

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By ireallyshouldknowthisbut
06th Dec 2021 16:23

my timetable is:

1. Do nothing we were not doing anyway (ie ensuring our clients have the most suitable bookkeeping system for them, not for HMRC, most of which are digital of course)

2. March 2023, assess situation.

3. If there are no changes, push backs or delays (which would be a miracle given the history on this) speak to every client over the 22/23 tax season.

4. Ensure at a minimum some low quality data is filed to HMRC by at least 30th April 2024, the earliest possible penalty date - assuming of course these are not suspended as would normally happen in the first year of implementation. This might be via a number of methods. But my guess is by that point HMRC will be under huge pressure to abandon the project once it becomes public knowledge of how stupid this is and we might well even have a new government by then looking to win over small businesses and landlords rather than brutally punish them and bury them in red tape.

Thanks (11)
Replying to ireallyshouldknowthisbut:
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By Hugo Fair
06th Dec 2021 17:03

Quite agree.
The main takeaway from the article is "Before contacting any client you will need to decide your strategy and work out your internal processes" ... but that is not possible until HMRC provide *details* (not just sound-bites) of how it is meant to work - and in particular which bits/processes are actually mandatory.
Why waste your time and resources (let alone those of your clients) in a vacuum of information? No-one will thank you for doing so (apart from software vendors).

Thanks (7)
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By GHarr497688
06th Dec 2021 17:01

Hey Jennifer SAGE must be one of your best customers on AWEB.
What if ya client has a computer "phobia" and no money to pay an Accountant to input all the data ?
Or have SAGE conveniently forgotten that on the basis the monthly "rip off" fee will be missed. I have seen some things in my time but never anything as stupid as this.

Thanks (5)
Replying to GHarr497688:
the sea otter
By memyself-eye
06th Dec 2021 18:07

I have..

HS2, Fire service regional centres, anything to do with NHS computer systems, anything to do with HMRC, MOD procurement, Test and Trace etc etc etc...

Glad I'm out of it!

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Replying to memyself-eye:
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By GHarr497688
06th Dec 2021 18:38

I will by next April - can't wait

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By adam.arca
07th Dec 2021 09:52

Thanks for the article, Jennifer.

It's always been my intention to circularise clients with a heads up (but nothing more) in Feb and I'll re-read your whole series then but, overall, I do have to agree with Ireallyshould and Hugo. What clients need now is a warning of what's coming over the horizon and some preliminary thoughts but definitely not any pre-emptive corralling when we don't even know if the corral is in the right place.

Thanks (2)
7om
By Tom 7000
07th Dec 2021 09:53

Wait until 6 weeks before D Day. As HMRC will move the goal posts

Then either
1. Give them your spreadsheet you have designed to capture the transactions and a link to bridging software. which is free
2. Give them Coconut and Hammock web addresses if they want to pay for it
3. We will data input it for you but its going to cost you 4 x as much as last year . Only 10% will take up that offer and hire a new trainee.

How hard can it be...

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Replying to Tom 7000:
By ireallyshouldknowthisbut
07th Dec 2021 10:00

@tim, you missed (1b) we populate the spreadsheet based on last years data. HMRC will be none the wiser after all and the data is not used for anything its just "busy work" for the little people.

Bit like the colouring in my kids got set when the school was closed due to Covid.

The work is set, but so long as you send it back no-one cares.

Thanks (2)
Replying to ireallyshouldknowthisbut:
7om
By Tom 7000
07th Dec 2021 10:28

I would go to accounting ethical jail forever and the key will be at the bottom of the atlantic

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Replying to Tom 7000:
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By North East Accountant
07th Dec 2021 16:25

Top idea.

Let's hope spreadsheets are still allowed....

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Replying to North East Accountant:
By ireallyshouldknowthisbut
07th Dec 2021 16:42

North East Accountant wrote:

Top idea.

Let's hope spreadsheets are still allowed....

Spreadsheets are more certainly allowed.

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Replying to ireallyshouldknowthisbut:
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By North East Accountant
07th Dec 2021 17:59

At the minute they are......but how can we believe a word HMRC says with so many last minute changes.

And thinking of HMRC end goal of all transaction data, iXBRL, fully auditable by computer etc (just like quarterly tax payments, deny, deny ,deny and then oh here's a consultation on it) spreadsheets just won't cut it.

Thanks (0)
Replying to North East Accountant:
Morph
By kevinringer
08th Dec 2021 09:11

Spreadsheets will be permitted, but will they work? VAT is a transactional tax so lends itself to simple spreadsheet listing: something a client can do themselves (most of the time). But ITSA is far more complex because (1) it requires judgement (eg capital v revenue) (2) expenses require apportionment (3) the spreadsheet will need to handle all the Tax Return schedules (eg rental income onto Property, trading into Self Employment, interest onto TR3 etc). I feel that the spreadsheet will be so complex, it might be simpler to use software.

Thanks (0)
Replying to kevinringer:
RLI
By lionofludesch
08th Dec 2021 14:37

kevinringer wrote:

Spreadsheets will be permitted, but will they work? VAT is a transactional tax so lends itself to simple spreadsheet listing: something a client can do themselves (most of the time). But ITSA is far more complex because (1) it requires judgement (eg capital v revenue) (2) expenses require apportionment (3) the spreadsheet will need to handle all the Tax Return schedules (eg rental income onto Property, trading into Self Employment, interest onto TR3 etc). I feel that the spreadsheet will be so complex, it might be simpler to use software.

I'd have liked to see how they integrate with the EOPS before deciding to use spreadsheets. I'm thinking "not very well" but there's a lot we don't know just yet.

Thanks (0)
Replying to lionofludesch:
By ireallyshouldknowthisbut
08th Dec 2021 17:38

lionofludesch wrote:

kevinringer wrote:

Spreadsheets will be permitted, but will they work? VAT is a transactional tax so lends itself to simple spreadsheet listing: something a client can do themselves (most of the time). But ITSA is far more complex because (1) it requires judgement (eg capital v revenue) (2) expenses require apportionment (3) the spreadsheet will need to handle all the Tax Return schedules (eg rental income onto Property, trading into Self Employment, interest onto TR3 etc). I feel that the spreadsheet will be so complex, it might be simpler to use software.

I'd have liked to see how they integrate with the EOPS before deciding to use spreadsheets. I'm thinking "not very well" but there's a lot we don't know just yet.


The quarterly junk filings are standalone.
They don't have any direct input to the new as yet undesigned tax returns which replace one single filing with.....yup a blizzard of mini returns as that will of course work better. We don't even know of course if the quarterly junk returns will be the highest tide point on this doomed project. Think hs2 North of brum. And suddenly the light dawn that hmrc already have a digital tax return.
Thanks (1)
Replying to ireallyshouldknowthisbut:
RLI
By lionofludesch
08th Dec 2021 17:44

ireallyshouldknowthisbut wrote:

The quarterly junk filings are standalone.
They don't have any direct input to the new as yet undesigned tax returns which replace one single filing with.....yup a blizzard of mini returns as that will of course work better.

I like your confidence that this will come to pass, yet, for some reason, I don't share it.

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By colinstewart
07th Dec 2021 10:19

I am aghast that anyone should think that we accountants should need this kind of article, frankly it is a bit of an insult. How did we manage to get CJRS, SEISS, BBLs, CIBLs, Covid SSP all working ? We did what we are good at..... used our brains! How long did it take for the software houses to catch up? Pah!

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By Mr J Andrews
07th Dec 2021 10:26

Fifth instalment of seven and continued ignorance of measures to claim Exemption from MTD. But this won't help software companies . Perhaps the best will be kept til last ?
And so many ''Mays'' , ''Mights'', ''Possibles'' and ''Probablies . My advice to clients so far is to be prepared for a dumb idea of [ atleast ] quarterly reporting and all the extra administration entailed , coupled with the obvious fact that less working time will follow - and loss of income - but sadly could mean increased fees. But fortunately no-one within this Govt. has a clue how to implement such a disastrous plan at the moment and are reliant upon the likes of the accountancy profession to plan the way forward for them. More news if and , as and when, this doltishness should materialise.
No doubt HMRC getting so many ideas and are learning so much from these articles as to what they should be doing . Perhaps the final two instalments should include some common sense indoctrination that , on reflection, the MTD limit should be kept at the VAT threshhold.

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By Duggimon
07th Dec 2021 11:03

There is no reason not to add a year on to all of these dates. With the possible exception of moving basis periods which some people might get the most benefit/least impact from by using a big covid period to absorb the potential extra profits of the rebasing period, everything else can and probably should be ignored until the end of 2022.

Who knows what MTD will look like by then? I am not going to put anyone on a bookkeeping system they don't want or need until they absolutely have to. Anyone who does want or need it will move to it regardless of the MTD timetable.

Thanks (3)
Morph
By kevinringer
07th Dec 2021 13:30

I'm working flat out on VAT returns today and SA until 31 January. In fact I'm having problems because of issues HMRC's end all to do with MTD! I've wasted 2 hours today trying to get HMRC to fix their problem because they've shifted a non-MTD client to the ASA but have made a pig's ear of it. So yeah, MTD is wonderful: it has wasted more of my time than anything else that's come out of HMRC.

Spring 2022 I'll review my sub £85k clients and decide who to claim exemption on the grounds of digital exclusion (most of them).

Spring 2024 I'll contact my sole traders and landlords (they've all had newsletters but they're not interested). Most of my clients are partnerships which means most will be deferred until 2025.

My policy has been to fight MTD and do nothing client-specific until I have to. I see no reason to change.

Thanks (3)
Replying to kevinringer:
RLI
By lionofludesch
08th Dec 2021 07:09

kevinringer wrote:

I'm working flat out on VAT returns today and SA until 31 January. In fact I'm having problems because of issues HMRC's end all to do with MTD! I've wasted 2 hours today trying to get HMRC to fix their problem because they've shifted a non-MTD client to the ASA but have made a pig's ear of it. So yeah, MTD is wonderful: it has wasted more of my time than anything else that's come out of HMRC.

Spring 2022 I'll review my sub £85k clients and decide who to claim exemption on the grounds of digital exclusion (most of them).

Spring 2024 I'll contact my sole traders and landlords (they've all had newsletters but they're not interested). Most of my clients are partnerships which means most will be deferred until 2025.

My policy has been to fight MTD and do nothing client-specific until I have to. I see no reason to change.

It's always a mistake to be at the cutting edge of technology. Let other folk sort out the problems.

One of the biggest issues for me would be the increasing choice of software. How would I test out all the options? Which would be best for each if my clients? How many will increase their prices exponentially in a couple of years' time? How easy would it be to switch to a different software?

Thanks (0)
Replying to lionofludesch:
Morph
By kevinringer
08th Dec 2021 09:14

MTD VAT we decided not to review all software. We decided for historical reasons:

Desktop software = Sage
Cloud software = QuickBooks
Bridging software = Absolute

I doubt we selected the best, or the cheapest. But we would have had to spend weeks to review them all. We're likely to stick with these for MTD ITSA.

Thanks (0)
paddle steamer
By DJKL
08th Dec 2021 12:43

My checklist

1. Retire from professional practice when all the nonsense was observable on the horizon. (Completed)
2. Make plans with group entities to morph to bespoke software for property industry. (Currently a work in progress.)
3. Time full retirement for when all the nonsense becomes fact (to be determined, currently monitoring phase )
4. When retired achieve lifetime ambition of becoming irascible regular writer to "The Scotsman" letters page as become more and more detached from reality.
5. Drink more, do less.
6. Take more holidays if/when travel becomes more normal (not having to worry about fitting around any reporting deadlines bar own tax returns)
7. When own tax return is beyond me become that difficult client for A N Other accountant.

Thanks (4)
Replying to DJKL:
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By Hugo Fair
08th Dec 2021 13:52

Wish I was allowed to hit the Thanks button more than once!

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