The UK government’s plan to expand Making Tax Digital (MTD) legislation will mean all VAT registered businesses will need to keep digital records from April 2022. This will apply to roughly 1.1 million VAT registered businesses. Beyond this, MTD will expand further to cover Income Tax for all self-employed businesses and landlords from April 2023.
With a quarter of businesses in this threshold already voluntarily registered for MTD, that leaves around 750,000 businesses who will need to start thinking about how they tackle the obligation of this new legislation.
While many may see this as an extra hassle, MTD will actually bring your firm a range of benefits and opportunities – which can also be passed onto your clients. It’s just a matter of how you position it to team members within your firm.
What are the opportunities with MTD?
1. Get closer to your clients
With the MTD for Income Tax legislation moving to quarterly tax returns, you’ll be in much more regular contact with your clients. This is a fantastic opportunity to grow your current relationships and help clients in ways that may have not been possible before.
When you only speak to your clients when they drop all their paperwork on you at the same time, you become pressed for time. Capacity may only allow you to complete their end of year tax returns to a high standard but not delve too much into their businesses.
It’s likely your clients will need more year-round help than they let on. And now that you’re in more regular contact throughout the year, those opportunities will reveal themselves. This could be help with a mortgage on a new business property or the upgrading of their ecommerce tech stack. Either way, you might be able to charge for these additional services.
2. Help your firm’s cash flow
Having a once a year rush to work on your clients’ paperwork might only allow you to raise one invoice for the work carried out. With the move to quarterly work, you’re able to invoice on that quarterly basis too.
As you’ll be aware, this gives your firm a more regular cash flow from your clients and will allow you to plan your own business operations accordingly. In the same way you help your own clients to forecast their business for growth opportunities and cash flow management, the regular income from completing quarterly tax returns will make this easier to do at your own firm too.
3. Avoid workflow peaks & troughs
You’ll be no stranger to the mad rush of tax season when clients bring you all their paperwork – and if you’re lucky you won’t have to chase any missing documents – which spike your workloads at the same time every year.
MTD’s quarterly nature means the peaks and troughs of your workflows will become much more stable. This gives you the opportunity to focus more on additional services which you can bill for and, ultimately, use to help your clients achieve their goals.
Steadier work might also increase the wellbeing of your team members, as they’ll be saved from the usual mad rush in January that can result in long hours and immense pressure.
4. Win business from competitors
Getting ahead on these opportunities will help establish your firm as experts in understanding MTD, and what benefits digitalisation will have for your clients. It may even put your firm in a strong position to win clients from less proactive accountants & bookkeepers.
People in the business world talk. Establishing your firm as the knowledge holders of MTD by implementing best practices now will have your clients singing your praises to their peers. And if the firms their peers work with aren’t as advanced as you, you might just find a higher demand for your services.
How to grab the benefits of MTD
Getting your firm MTD ready now will help your firm to grab all of the benefits – and remove the headaches of a last minute rush to keep up.
To help, we’ve put together a guide covering the three key steps you need to follow to prepare your firm for MTD.
Read it here.