The pain of transferring VAT registered clients with turnover above £85,000 onto MTD compatible software, is all but a distant memory now. But what have we learned from phase 1 of MTD that we can use to our advantage in the run-up to phase 2 coming into effect from April next year? This article highlights what you need to do to get ready for MTD Phase 2 and MTD ITSA.
Start MTD communications early
Despite being informed of the new MTD rules by their accountants, many clients left it very late before taking the steps to become MTD compatible. As a consequence, it led to a lot of last-minute stress and increased workloads to get these businesses to transfer to MTD. In some cases, training was required to start getting these clients to use Bridging software or accounts packages to do the digital links. This all added more pressure and workload to accountants.
For MTD phase 2, which hits VAT registered businesses below the threshold, you need to start talking to them now (if you haven’t already started). Phase 2 does not affect these businesses until April 2022. However, if you take out two months for tax season and Christmas, you only have 6 months left to get this latest group of clients to move to MTD compatible software. So start informing them now.
Agree your key MTD audiences
The MTD changes aren’t just relevant to clients that are affected by them, they are also applicable to your staff and an opportunity to attract prospective clients. In my first MTD communications blog written before MTD came into effect, I talked about your MTD Communications Plan and set out the key audiences you need to be communicating with. Click on the above link for more information.
Confirm your MTD activities
Review what marketing and client communication activities you carried out on the run-up to MTD phase 1 being introduced. From my experience firms were using a mix of the following activities:
- Regular meetings and phone conversations with their relevant clients.
- Letters/emails (with updates and reminders) to clients outlining the changes they needed to make.
- Creating leaflets/factsheets to send/hand out to staff, clients, and prospective clients.
- Writing new MTD specific pages on the website, detailing the services they were offering to help clients with MTD.
- Writing blogs for the website giving updates on the new MTD system, reminding people of the forthcoming changes, and keeping MTD at the front of people’s minds.
- Regular posts on social media, linking to the above website MTD service and blog pages.
- Organising MTD seminars and webinars to explain the changes and give demonstrations of MTD compatible software.
- Adverts and editorial in local/regional/trade media.
Based on your previous experience, identify which activities worked best for your firm. Then create a marketing action plan which sets out what activities will be done and when in the run up to the start of phase 2.
Early warning MTD ITSA communications
Perhaps the larger issue accountancy firms will have to deal with in the next couple of years is the introduction of MTD for Income Tax and Self Assessment (MTD ITSA), which comes into effect from April 2023. Whilst this will only affect residential landlords and sole traders who are earning £10,000 or more income per year, it is thought that a vast majority of these people don’t currently use robust accounting software or spreadsheets. To migrate these clients onto an MTD compatible platform is going to require a lot of time and effort and in some cases training on new ways of recording their income and expenditure.
Your communications plan for these clients needs to start soon, to give them time to get used to the new regime and what will be required of them. Initially, I would start with conversations, but a more detailed communications plan needs to be implemented across the 12 months prior to the rules coming into force.
If I can help you plan and implement your marketing and client communication activities for MTD phase 2 and MTD ITSA, do get in touch.
