Three ways to start preparing for MTD
Della Hudson outlines a three step plan to help practitioners get clients ready for the looming roll out of Making Tax Digital.
MTD for income tax lands in April 2023. In addition to the traditional self assessment season, businesses and landlords will need to make quarterly submissions.
So, how can firms use the intervening time to set themselves up for a successful transition?
Change doesn’t happen overnight. Start sharing information with your clients now so that MTD doesn’t come as a complete shock in 2023. Share the business benefits of having up to date financial information, prompt billing, linking apps for faster payment etc. HMRC is providing the stick but we can encourage clients by sharing the carrots that they will receive as a result of this.
Keep your team updated as more detailed information becomes available and arrange formal training. This means that your whole team will be able to assist clients in the move to MTD rather than everything falling on you.
2. Adapt your systems
With an increased workload, we need to look at how to make our own businesses run more efficiently. Adapting your systems to manage four income tax periods each year will be an enabler. Making the changes sooner rather than later means that you will reap the benefits now and your team will also be comfortable using them when they have to handle MTD itself.
3. Equip clients with the right products
You can triage your clients to work out roughly what they will each need to do. Categories might include clients that are:
- Already using software to produce full monthly/quarterly management accounts.
- Already using software for bookkeeping and simple business.
- Already using software for bookkeeping and complex business.
- Not using any software or using software that will not be MTD compliant in time.
I will focus on this last group, as these clients have the potential to be most time-consuming for practices if we don’t act now.
The main way to help this group is to introduce them to suitable software that will help them do the quarterly returns themselves, or an app that will help clients provide you with the necessary information in a suitable format to process it efficiently.
Fortunately, since MTD for VAT went live, we have seen the rise of transformative products that offer client business accounts with inbuilt bookkeeping software. These apps make it easy for small businesses to comply with digital record requirements and, importantly, will save practices a great deal of time.
A business account with inbuilt accounting software ensures a single ledger with accurate data. By providing accountants with anytime access to their clients’ data, practices no longer need to worry about bank feed lags, errors and duplicate transactions. And we can finally wave goodbye to sending clients re-authorisation requests every three months.
These innovative dual products have the power to help us as much as our clients. They will help small businesses comply with MTD and provide us with the data we need to speed up our workflows and reduce our admin work.
Why start now?
It will take time to talk to all of our clients, find out their exact requirements, recommend, install and then train them to use suitable software. Preparing now will help you strategically balance your additional workload over 24+ months rather than painfully rushing through everything in a panic in the final few weeks.
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Della Hudson was part of the class of 2009. She built up Hudson Business Accountants and Advisers from her kitchen table to a small team of flexible workers with independent premises in Nailsea, near Bristol. The firm ran regular Money Matters seminars and other training and webinars. Della sold the firm in 2017 in order to focus on the...