Is your accounting firm ready for Making Tax Digital?
The deadline for the next phase of Making Tax Digital (MTD) is only a month away.
With smaller VAT-registered businesses due to come under the scheme from 1 April 2022, is your firm ready?
Reach out to your clients
For many accountants, MTD is starting to feel like old news at this point. The first mandatory stage began three years ago, when VAT-registered businesses with a turnover of more than £85,000 were required to keep digital records and file returns via compatible software.
Since then, accountants have had plenty of experience processing quarterly VAT returns using MTD-compatible software.
But now’s not the time to be complacent – even if MTD’s been on your radar since 2015, that doesn’t mean your smaller clients will be as familiar with it as you are.
In fact, a recent survey by QuickBooks suggested 82% of small businesses are still unaware they need to be ready for the scheme by April 2022.
If you haven’t done so already, now is the time to amp up your communications and target those clients who are not yet operating within the scheme.
Use your practice management or customer management system to keep track of where each client stands and how you’ve communicated with them so far about MTD.
This way, you can pay extra attention to the people who need a nudge, without bothering those who are already on board with repetitive messages.
And, if you’re using AIRPA, you can link this data with your accounting software and see everything in one place.
Review your systems
The past three years have been an adjustment for a lot of firms. Now that the next stage is beginning, it’s a good time to look at your internal systems for getting clients on board with MTD, and make sure they’re working for you.
For instance, are you happy with the software you’re using? Does it have all the features you need, and is it easy for your team to collaborate with? Or are there technical hitches that slow things down every quarter?
Taking some time to smooth out those processes will be well worth it when you’ve got even more clients to meet the MTD requirements for.
You might even want to consider standardising your processes for clients when it comes to software options, for instance by moving any clients who are still using spreadsheets onto accounting software as default.
Sell the benefits
When talking to your clients about MTD, it doesn’t all have to be about deadlines and penalties. This is a great opportunity to explain the benefits of modern accounting software, beyond complying with the rules.
As of last year, tighter rules around digital links mean no manual data entry is allowed between different software. It’s still possible to use bridging software to connect spreadsheets with software that can connect to HMRC’s API, but let’s be honest – is this really the best option for you or your clients?
Taking a strong stance on the convenience of software over spreadsheets and guiding your clients through the setup means you can solidify your role as a trusted adviser, while making things more streamlined for your own firm at the same time.
By making the switch to a connected digital system, your clients can:
- save time, which can be invested back into the business or simply used to reduce stress.eep more accurate data, reducing the risk of run-ins with HMRC
- check their financial position at any point in time, not just at month-end
- access their accounts from any location with an internet connection
- learn more about their business performance and plan effectively
- get in-depth, personalised advice from you as their accountant.
Look ahead
This next phase marks the full roll-out of the MTD for VAT programme, but it doesn’t end there.
In 2024, MTD for income tax self-assessment is scheduled to begin, and the scheme could extend to corporation tax from 2026 at the earliest.
By putting effective digital systems in place now, you’ll be in a great position to bring the next waves of clients on board, and offer a data-driven, modern accounting service.
Talk to us about getting your systems in order for the next phases of MTD.