It’s coming. Making Tax Digital (MTD) will be fully fledged legislation for all VAT registered businesses in April 2022 – and from April 2023 MTD for Income Tax will apply to all self-employed businesses and landlords.
Now is the time to work out best practice and set up the processes your firm will need to embrace this change. Giving yourself that time to plan now is vital to prepare your firm, show clients the benefits and ensure they’re not poached by any rival firms who are more proactive.
To help, here are the three key steps to prepare your firm for MTD:
1. Accountability
Any well intentioned project will fall to the wayside if there isn’t someone accountable for its success. So it’s really important that you identify a team member in your firm to champion the MTD strategy.
This could be a senior member of the firm or a more experienced team member – it might even be you! – each brings their own benefits.
A senior member of the firm would be a strong choice as their seniority may just be the ticket to getting buy-in for the wider business. Alternatively, choosing an experienced team member shows them that you value their knowledge and insights, giving them a sense of empowerment towards the task.
Whichever direction you go in, you need to set your champion off in the right direction. The following are key questions for them to answer when putting a strategy together:
- What systems and processes do we need to change?
- What new technology will we need?
- How will this stretch capacity and resources?
- How many clients are affected?
- How will we price services in line with MTD?
- What time frame will we accomplish this in?
- How will we liaise and educate clients on MTD?
This isn’t an exhausting list by any means but answering these questions will help you to form a strategy which you can measure and make visible to your wider firm.
It’s also important for this champion to get your firm’s buy-in by showing the benefits which MTD can bring to your business. For more on this, we’ve put together a guide to showing your firm the opportunities of MTD which you can read here.
2. Measurability
To measure the success of your MTD strategy, you really need to know how many clients you’ve got – big or small. From now (20.09.21), you’ve got 6 months left for clients caught by MTD for VAT and 18 months for clients who’ll need to meet the MTD for Income Tax requirements.
It’s really important to know exactly how many clients you’ve got. First of all, if you don’t know how many you’ve got, you won’t know if you’ve been successful in speaking to all of them. Secondly, there could be serious implications for those you miss, souring your relationship and leading them to work with another firm.
Identifying the number of clients you need to contact and potentially work more closely with will also give you insight into your firm’s capacity for MTD. Quarterly tax returns will reduce the end of year panic, but it will mean people will be working on them at a more regular cadence.
Clients might then expect more from your firm – which isn’t necessarily an issue. Greater clarity over their finances will help them plan better for the future and avoid any unexpected surprises.
3. Visibility
When you’ve identified the amount of clients you’ve got to speak to, you can start having fun with your approach.
This is by no means the only way, but think about gamifying the process of contacting your clients. Set monthly targets for the number of clients each team needs to reach and reward those who hit them. You’ll soon see an uptake in results once an element of friendly competition is brought into play.
Think beyond the visibility of contacting clients too. Encourage team members to ask questions in an open forum about what the changes mean for your firm. It might be possible that they ask questions which clients have brought up to them directly and the firm needs to address. Being open with all sides here is an important way to make the transition to MTD as smooth as possible.
It’s also a good idea to get into the habit of collecting records digitally with your clients now. If you have a small number of clients who are already doing this, ask them for testimonials which you can share with clients who are reluctant to do so. The key metric here is to make all of the good work you’re doing on behalf of your clients as visible as possible.
How Dext can help you increase capacity
Dext has a range of products which can help you increase the capacity of your firm for tackling MTD.
Dext Prepare makes it easy for your clients to submit their paperwork digitally and save you from chasing them. This is a key part in having records stored electronically to meet the fundamental requirements of MTD.
Dext Precision shows the quality of your client’s data in real-time, without needing to manually look through their records. This will help you have more meaningful conversations with clients and create capacity in your firm to ensure all of the MTD requirements are met.
If you’re interested, see how Dext can give you more capacity to support MTD with a free trial: