MTD for ITSA: How practice management software will help

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Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is the biggest shake up to the administrative foundation of the UK tax system since self assessment was introduced in 1996. Despite delays and speculation the impending industry overhaul is absolutely on its way.

There’s no denying that MTD for ITSA will increase your workload. As well as the quadrupled frequency in filing for affected clients, you’ll also need to be both efficient and effective in gathering receipts and invoices regularly. If not, you could quickly fall behind and the whole process could become much more stressful than it needs to be.

In this guide, we take a look at five ways practice management software will help you handle MTD for ITSA.

Task management and workflow

The increased workload of MTD for ITSA necessitates organisation across your whole team. Practice management software provides comprehensive task management that means you can forget endless to-do lists and reshuffling your day. Using your clients’ period end dates and deadlines, AM automatically generates task lists for each person on your team. You can set internal target dates and create your own tasks for any non-compliance work. Break tasks down into subtasks and assign them to individual team members. With everyone across your practice updating their progress as they work, AM becomes your one-stop-shop for checking the progress of any job.

By utilising practice management software to ease your workload you’ll lessen the burden of MTD for ITSA and might even find you’re able to take on more clients and grow your firm.

Technology adoption: Old dogs, new tricks

MTD for ITSA is also going to increase the workload of your clients. They’ll need to get into the habit of submitting information regularly – just like your team will need to. And it isn’t easy to break old habits and form new ones. Change is hard, and the nature of clients’ returns is changing drastically. Is your practice already digitally set-up? What about your clients – do they favour paper-based record keeping methods? What are the opportunities and limitations of your existing softwares and processes? These are all questions that you’ll need to consider as soon as possible.

In April 2022 HMRC published a report that explored the preparedness of Income Tax Self Assessment customers for the MTD mandation in April 2024. The population was comprised of unincorporated small businesses, self-employed people, and landlords with income over £10,000. Research found that 33% of the population thought using software would be difficult. As you’d expect, their views on their ability to comply with MTD and utilise software were shaped by their age, current practices, and comfort with technology. In terms of sending quarterly summaries, only 4 in 10 thought it would be easy. Primary concerns were in relation to using MTD-compatible software, and reluctance to change long-established practices.

It’s clear that it will take time for your clients (and your team) to adapt. The upheaval requires you to take a step back and look at the big picture. This isn’t just about specific MTD work; it’s about reviewing your entire process to make the changes feasible. A solid digital set up for you and your clients will bring simplicity. It’ll ease your workload, but also make technology the norm. If it’s part of the day-to-day within your practice and your clients’ businesses, habits will change. Practice management software sits at the heart of your firm and is an integral part of your firm’s workflow. It becomes an environment for the team to see what assignments are due and when, the current status of a task, and the latest interaction with the client. Clients connect with the firm via a GDPR-compliant online portal where they can upload and sign documents, update their details and check deadlines. It will digitise your whole process from onboarding, AML checks and risk assessment to task management and profitability.

Communication: keeping everyone on the same (paperless) page

With the shift from one submission to four, clients are going to have to engage with you, the accountant, more. Many accountants don’t communicate with their clients on a regular basis, because they simply don’t need to. This won’t be the case anymore. Make sure that as well as clarifying new procedures and introducing technology, you also outline the benefits of the new system.

Practice management software makes it easy to communicate with your clients regularly. Automatic communication features plus time-stamped records of all correspondence keep everyone in the loop. It means any member of your team can pick up the client work and provide a seamless experience. It’ll also protect your liability – when emails that have been opened by clients are tagged, you can guarantee that your practice has followed the correct procedures if any disputes arise.

Pricing your services: making data-based decisions

There’s no denying it: if you’re doing more work for your clients, it’s going to cost more. Many practices will need to review fee structures to ensure that additional work and additional software licences are reflected in service prices. Don’t be afraid to charge more if you need to. But how do you decide price points? These are business-critical decisions and need to be based on data.

Practice management software includes time tracking tools so that you can analyse staff costs against specific client work. Keep an eye on productivity, track profitability and create instant invoices from work in progress. See where profits are coming from – identify which clients and team members are generating the most profit

Many firms recognise MTD for ITSA as an opportunity to move clients to regular billing. Historically, annual billing on completing a job has been the industry standard, but this hasn’t always been to the benefit of an accountant’s cash flow. In the future you’ll be providing services on a more regular basis and you’ll be communicating on a more regular basis. This gives you an opportunity to bill on a more regular basis.

Take AccountancyManager for a spin

The quickest way to find out how practice management software can help your firm tackle MTD for ITSA is with a free 30-day trial. Our sales and support teams will be on hand every step of the way via phone and email to ensure our fully-customisable system works in a way that’s best suited to the needs of your firm.

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