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Troubleshoot your project rollout to make MTD work for youby
In the fifth instalment of our ‘Taking control of Making Tax Digital (MTD)’ series in association with Dext, we’ll explore how to bring your planning together and execute in an efficient, agile way that adapts to your new vision.
Over the previous few months, we’ve published a series of 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 for income tax self assessment (MTD ITSA) presents.
If you’ve missed an article they’re all available on our Dext taking control of MTD hub.
Turning plans into results
Our focus in this series has been to help you take control of your MTD ITSA transition. While this change is externally mandated, you can turn it to your advantage by ensuring that you change on your own terms, in line with your own digital vision for your firm and your clients.
However, going from plan to reality is rarely as smooth as we would like, especially when it comes to changing habits. The risk for accountants when it comes to implementing new client processes is getting caught up in hours of unpaid chasing, training and re-training, all of which cut into your margins and prevent you from doing the work your clients value most.
To avoid this, it’s essential to balance flexibility with standardisation, meeting clients on their level and providing the right incentives while controlling your level of engagement.
Reviewing your progress
Planning your approach according to the needs of your clients is a key step in maximising your chances of success. However, it’s likely that your approach may need reviewing and revising as you go along.
For example, you may find that clients with simple cash basis accounting needs that you thought would be simple to digitise show more resistance to using new tools and the associated expense and require additional incentives to change their habits. In this instance it’s important to not only pinpoint the bottleneck in your change management process but also rethink your approach as needed:
- Are we using the right incentives?
- How does our communication style resonate with our clients?
- Am I supporting my team appropriately to accomplish their responsibilities?
- Am I planning sufficient time to achieve my goals?
Troubleshooting solutions as a team
While sharing responsibilities among your team can help improve solution design and delivery when implementing changes in your practice, it’s essential to support them as a team.
Creating an open space for discussion around progress encourages your team to surface issues early and clearly, and enables the rest of your staff to be part of finding a solution, or even new ways to work together.
Creative client incentives
While HMRC claims various benefits of MTD ITSA, not all of which practitioners agree on, it’s unquestionable that accountants know best what their clients need and how to deliver it.
It may well be the case that not every client is ideally suited for digital record keeping and tax submission, whether by disposition or tax structure, but if you wish to keep these clients compliant it’s now the duty of advisers to find the right ‘carrot’ to inspire change.
These incentives should be tailored both to the clients’ needs but match the vision you have for your firm, in line with the value you want to provide:
- Financial incentives: One of the biggest fears of accounting firms is that MTD ITSA will create more unpaid work for teams. To mitigate this, you can bring your clients into the decision. For clients unwilling to do their own digital record keeping and who require your team to digitise their sales and expense data, you can propose an additional fee to cover this time. On the other hand, clients able to manage their own digital bookkeeping with tools such as Dext could be eligible for a discount based on your calculation of time saved.
- Service incentives: While most clients will not be excited by the prospect of quarterly submissions, by building the right systems you can turn this into a useful service. For example, clients that regularly submit their expense and income data on time every month could be rewarded with a monthly tax obligation update, or automated management accounts that help them with their financial planning.
Whilst many practices may not be keen on the idea of discounting prices or offering free service incentives, it’s worth considering for a number of reasons. Because clients are maintaining digital records, that will lead to improved accuracy, meaning any discounted fee is balanced by less time being spent by the advisor. Write-offs may be lower, recoverability could be higher and additional capacity is created which can be used on other chargeable work, so overall, margins would improve.
Any free service incentives you offer should be able to be automated, meaning no extra time is spent beyond setting up the automated workflows. Practices should also find that they can bring work forward, as they’re not waiting for records to be dropped off, or chasing missing paperwork as often happens with paper records. So, advisors can see a lot of benefits even though the fee is reduced.
Prioritise your practice
In your journey to adapt your practice to MTD ITSA, you have the opportunity to create a new, value-driven system that helps your team, your clients and your bottom line.
However, to truly feel the benefits of this change, you need to commit to your own vision. Attempting to keep some clients using your previous processes alongside those working with new systems will effectively leave you running two practices, and limit the success of both.
For clients that are unable or unwilling to move with your practice, your best option could be to recommend them to another practitioner, rather than providing a service that no longer aligns with the rest of your clients.
Take control of your future
At Dext, we’re helping thousands of firms create future-ready processes that benefit clients, owners and revenues, while remaining fully compliant. No matter where you are on the journey towards the next stage of your practice, time-saving technology, support and advice are always available from our expert team.
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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...