HMRC is pressing on with its roll out of MTD, but now targeting smaller businesses from April 2022. So, what lessons did you learn from the first round of MTD client onboarding so you can avoid mistakes, confusion and hopefully a load of stress next time?!
Whilst accountants and relevant VAT registered businesses were given plenty of notice ahead of the first phase of the MTD roll out, the transition to MTD compatible software didn’t happen until the last couple of months before the deadline. That put enormous pressure on accountancy firms to support clients, train staff, and in some cases train clients on how to use new software.
In the latest Finance Bill, HMRC has stated that from April 2022 MTD will become compulsory for all VAT registered businesses, including those with a turnover below the VAT threshold. To avoid the last-minute rush, your firm needs to start the process to onboard these new clients now.
MTD Phase 2 – things to consider
Based on the feedback of accountancy firms during the 2019 phase 1 roll out, over the coming weeks you need to consider the following:
- In order to avoid the last-minute rush with onboarding clients, how soon should you start communicating the MTD changes to business owners who will be affected? I suggest this probably needs to start in the Autumn – this year!
- You also need to consider what communication channels you will use to make your clients aware of these changes and what changes they need to make. This should be a range of activities including emails, letters, phone calls and/or meetings, social media, the website, webinars and so on. Our blog based on communicating Phase 1 of MTD is still relevant today, see ‘MTD Communications are you on the ball?’
- What information will you tell these business owners? By all means, give them the facts and information, but more importantly share with them your experiences of Phase 1, warts and all! Provide case studies of clients you helped during that process, highlight the positives of using MTD compatible software, but also give them tips on what they need to avoid. The latter can be helped if businesses start the process well in advance of the April 2022 deadline.
- What internal capacity do you have to support this next phase? Whilst some firms have put their recruitment plans on hold due to coronavirus, the imminent arrival of MTD Phase 2, may mean they are now understaffed. Do you need to look at your staffing levels, particularly junior staff and trainees who are more likely to be involved with supporting clients with their MTD bookkeeping needs? With the recently announced Government incentive to offer up to £3,000 in wage subsidies for apprenticeships, now could be a good time to consider taking on an accounting apprentice. My friends at Accountancy Learning could help you recruit and train the best candidates. Check out their website at: https://apprenticeships.accountancylearning.co.uk/
- What MTD Compatible software will you be advising these clients to use? Bearing in mind these are likely to be smaller businesses than those involved in Phase 1, many may be using spreadsheets for their bookkeeping/accounting processes. Some business owners may be reluctant to move to an ‘all singing all dancing’ cloud accounting software package. Using bridging software so they can keep their spreadsheets, maybe a less painful option (for all concerned!). Absolute Accounting Software’s Excel VAT Filer bridging software is well worth a look, see https://www.absoluteexcelvatfiler.co.uk. The software starts from just £40 + VAT for 10 traders for a 13-month licence. They supply both accountants and business end-users, with great feedback from both parties on how simple the software is to use.
MTD Phase 3 – April 2023 will be here very soon!
HMRC’s next big MTD milestone will be rolling out MTD to all taxpayers who file income tax self assessment returns for businesses or property income over £10,000 per annum. Phase 3 is planned to come into effect from April 2023.
Whilst that seems a long time in the future, this group of individuals is likely to be the hardest to transition onto MTD software as they may not be using anything at all at the moment. They will need more time to adjust to the forthcoming changes and so communicating with them should be done sooner rather than later.
If you need help with keeping your clients up to speed with these changes and how it will affect them, don’t hesitate to contact me for a free client comms consultation. Simply email me at vicki@momentumforprofessionals.co.uk or call me on 01822 833300.
