Making Tax Digital (MTD) is the biggest shake up in business taxes for a generation.
For accountants, it offers increased revenue opportunities – but also a potentially increased workload.
There are new HMRC reporting regimes for clients, for example, where none existed previously.
More landlords are likely to need help working within the confines of Making Tax Digital for Income Tax Self Assessment (also known as MTD for Income Tax and MTD for ITSA) too.
Introducing the MTD workload estimator
To find out how your workload might change, accountants and other tax professionals can use our interactive workload estimator.
This allows you to get ahead of the work required, and so ensure you’re MTD ready.
The interactive tool will tell you how many reports, returns and other submissions you’ll have to make in:
- April 2022 onwards, now MTD for VAT applies to all VAT-registered clients.
- April 2024 onwards, when MTD for Income Tax begins for sole traders and/or landlords with income above £10,000
- April 2025 onwards, when MTD for Income Tax begins for general partnerships that have income above £10,000.
All you have to do is input a rough count of the number of clients you have in each category.
You’ll then get an instant summary of the total number of reports and submissions required. Also included within the tool are help sections on the basics of MTD for VAT and MTD for Income Tax.
Our interactive tool will be updated if guidance changes from HMRC.
The figures may prove surprising.
Even a smaller practice could find its workload increasing because of Making Tax Digital.
For example, a practice with 40 VAT clients with quarterly reporting requirements and 50 Self Assessment clients will, as of April 2024, potentially need to assist clients with 460 reports or submissions for MTD within a 12-month period – up from around 150 to 200 right now.
New ways of working with clients
The extra workload might sound significant but software allows you to automate workflows for many reports and submissions.
Using it will also enable greater collaboration across your practice and client base.
This means you can help your clients be as compliant as possible within the scope of MTD.
Furthermore, more interactions with your clients across the year provides additional opportunities to sell advisory services and develop new client service offerings.
Home-based businesses, for example, may have minimal capital overheads or expenditure yet achieve high turnovers.
They may be looking for an outsourced finance manager to become a regular part of their processes.
Can you or your team provide that capacity?
Start speaking to your clients now to ensure there aren’t any surprises around Making Tax Digital.
Consider also talking about the basis period reform that’s happening in 2023/24, which may have equal impact on business accounting.
Similarly, within your practice, review your processes to ensure there’s the capacity to cover MTD requirements.
And think outside the box. You could, for example, provide software training for your clients.
Finally, learn how you can improve the efficiency of your practice by adding automation with this ROI calculator.
It’s never too late to start thinking about the impact of Making Tax Digital on your practice.
Lessons can be learned from MTD for VAT, and plans can be made so MTD for Income Tax isn’t too much of a surprise – for either your practice or your clients.
Editor’s note: This article was first published in December 2021 and has been updated for relevance.
Making Tax Digital: A practice survival guide
Need support with Making Tax Digital, for your clients and your practice? This free guide will help you get ready for MTD for VAT, Income Tax Self Assessment and Corporation Tax.
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