The MTD roll-out shifts the focus from end-of-year filing to ongoing, real-time bookkeeping submissions. So now’s a great time to start offering this service if you don’t already.
Making Tax Digital for Business (MTD) came into force on 1 April 2019, starting with MTD for VAT. From that date, the majority of VAT-registered businesses with a turnover above the £85,000 threshold must keep digital bookkeeping records and file VAT returns using “functional compatible software”.
This has forced mandated tax payers to either purchase the software and do the bookkeeping and filing themselves, or turn to their accountant. But what if their accountant ‘doesn’t do bookkeeping’?
Increased demand for bookkeeping services
Zoe Whitman runs bookkeeping practice But the Books: “We’ve seen increased demand for our services since MTD – businesses who might have been prepared to manage their own VAT affairs prior to MTD now see the value of hiring an expert.”
The time investment required to learn how to submit your taxes digitally, on top of making sure you do it correctly, is just giving some businesses that final push towards outsourcing their books.
“Some clients call on us because their accountant can’t, or chooses not to, support them with bookkeeping,” continues Zoe, which is great news for self-employed bookkeepers.
Embrace change or lose out
If the accountant doesn’t offer this service, it’s usually because they’re not MTD-ready themselves, they don’t have the resources, or they think bookkeeping isn’t worth their while as a service.
She says: “We are both bookkeepers and accountants and we’ve had a lot of new business this year. The majority of it has been clients moving away from old-school accountants who aren’t embracing changes like MTD cloud-based software and don’t provide everything under one roof. If they don’t flex to their clients’ changing needs, they will indeed miss out on custom and fees.”
Penny definitely doesn’t think bookkeeping fees should be so easily dismissed by accountancy practices, and her business is reaping the rewards as a result; “My return on complete packages that include bookkeeping is indeed greater than that on accounts alone.”
AI is streamlining bookkeeping
Rebecca Roberts, accounts manager at UHY Nottingham, says that MTD cloud-based accounting software increases efficiency with bookkeeping, making it a far more viable offering.
“It harnesses the power of automated intelligence, removing the need for manual input on tasks like posting invoices and reconciling bank accounts.”
Rebecca Trudgett, director and founder of SwitchFoot Accounting, points out that because bookkeeping can now be done using fewer staff hours, this leaves more time in the budgets to deliver more added value services alongside bookkeeping.
“You can now do more with the data available, so there are lots of opportunities to deliver new service lines off the back of that data.”
How to get more bookkeeping clients
In the run-up to the introduction of MTD for VAT, UHY reviewed all their clients to understand who would be impacted and when.
Roberts, Account Manager at UHY, says: “From this process we identified that some clients now required a full bookkeeping package because they had no time, desire or skills to maintain this function internally. So, in many cases where we historically only helped clients with annual statutory accounts, we now undertake their bookkeeping and the preparation of MTD compliant VAT returns as well.”
For those clients that remain unaffected by MTD for VAT, think about their future needs. What is their projected turnover? Which ones are likely to have to register for VAT and when?
Plan ahead and move any remaining reluctant clients to bookkeeping software – sooner or later, all will be affected by MTD (although HMRC has stated tax payers will not be required to keep digital records or update HMRC quarterly for income tax and corporation tax until April 2021 at the earliest).
Trudgett, Director of SwitchFoot Accounting, leapt on this golden opportunity: “I set my practice up to offer Xero consultancy and training and have helped lots of clients to migrate the data. Some have decided to outsource their bookkeeping and accounting to me as a result.”
Become a go-to expert for MTD
Position yourself as an MTD-compliant software expert to garner even more business.
Trudgett says: “I advertise through social media and talk about Xero and the changes coming with MTD at networking events. I’m now known as the local Xero expert.”
Busy Books are a Gold partner of Kashflow software. “We’ve had some clients find us through the Kashflow software accountants and bookkeepers directory where we’re listed,” Natasha Penny of Busy Books says.
You may also consider running MTD-themed workshops and webinars to attract new clients, or add value for existing ones.
Finally, touch base with your clients regularly.
Penny says: “We promote monthly and quarterly packages to encourage clients to come and see us more often, with their paperwork and with their business plans. Accountancy has shifted so much over the past few years – it’s not just about seeing people once a year now in a mad rush to do the accounts. Instead, it’s about frequent communication and, now, regular MTD reporting.”
MTD for VAT, the related software, and increased demand make bookkeeping more viable as a service, so it’s a great time to polish up your efforts if you currently don’t support your clients in this way.
Read more on MTD and tax as part of our #AATPowerUp Tax 2020 campaign for September and October:
- How MTD for income tax will shape the digital landscape
- Power up your tax knowledge with AAT
- How green taxes will shake up life in the UK
- MTD hub
Iwona Tokc-Wilde is a business journalist.