Making Tax Digital (MTD) represents a logistical challenge to accountants. Clients will have different needs, will enter MTD at different times and use different types of software. Instead of one peak period of work at the end of January each year, there will potentially be four peaks under MTD.

Working on the basis each client will have different requirements primarily based on their accounting year end dates and their existing record keeping arrangements, here are some top tips for accountants to consider as MTD rapidly approaches:

Top Tip 1

Risk assess your clients into three categories.

Category One - Unincorporated businesses and landlords with a turnover in excess of the VAT registration threshold will enter MTD first in April 2018, so identify those clients and their accounting year ends to begin with.

Category Two - Repeat the same exercise for unincorporated businesses and landlords with a gross annual turnover above £10,000, but below the VAT registration threshold, who will come into MTD in April 2019. Clients reporting VAT will also enter MTD from this point, as VAT returns are submitted via MTD.

Category Three - The same exercise needs to be undertaken for a final time to identify your incorporated business clients and very large partnerships with a turnover in excess of £10m a year.

Top Tip 2

Prioritising the clients listed under category one, identify those who currently use an entirely manual record keeping system as they are likely to need the most help. Then identify those clients who perhaps use a combination of manual record keeping alongside spreadsheets, followed by those clients who are already using accounting software in some form.

Top Tip 3

You should now have a spreadsheet listing clients according to time (accounting year end) and need. For example, your highest risk client may be a landlord who keeps manual records, receives rents in excess of £85,000 a year, will enter MTD on 6 April 2018 and who has historically always left his tax return to the last minute every January. 

Devise an educational strategy to talk to these high risk clients. Consider inviting them in for a breakfast briefing, or a weekend workshop. Support the face to face briefing or workshop with MTD newsletters and guides. Use the event to establish what your clients’ needs are moving forward. Are they going to ask you to upload their transactional data or just to check their quarterly updates? Perhaps they are only really worried about their End of Year declaration because that is what will attract a tax investigation if it is wrong and only want you to check that? Remind them that Fee Protection Investigation Insurance is available.

Top Tip 4

Consider suggesting a selection of your clients go into the MTD pilot, when their accounting period year ends after 5 April 2017. It would not just be a learning curve for any willing clients, but also for your accountancy practice as well. Perhaps seek three clients, ranging from a business already using accounting software, a business which uses a combination of manual records and spreadsheets and, finally, a client who will really struggle.

Top Tip 5 

Adopt a more flexible pricing structure for your expertise, perhaps charging a fixed fee for a specific piece of work, whilst maintaining an hourly rate approach to those clients who are going to expect a full MTD service.

Top Tip 6

Review your Letters of Engagement to make sure they reflect any practice changes you introduce.

Top Tip 7

What staffing changes do you need to make, if any? Do you need to recruit more staff? Do you need to send your staff on an MTD training course to learn the basics?

Top Tip 8

What changes to internal procedures do you need to make, if any? Do you currently use tax return checklists, which now need to change to quarterly update checklists? Do you need a tax timetable for each client, especially during the inevitable overlap year, when they have to file their final Self-Assessment return, before moving straight into MTD?

Top Tip 9

What is the opportunity to offer additional services to clients depending on their needs? How do you identify key trigger events, perhaps at the quarterly reporting stage? Do your clients have a potential R&D claim? Do they need funding to expand? Is a landlord client thinking about inheritance tax? Do you offer these services independently or do you partner with Abbey Tax, incorporating Gabelle?

Top Tip 10

What changes do you need to make to your website? Do you need more MTD content? Would a regular MTD digital newsletter be well received by your clients?

Repeat the same process for category two and three clients as the next MTD go live date approaches.

Can we help?

If you have any questions about Making Tax Digital please contact our Head of Technical Research, Guy Smith, on 0345 223 2727 or at