Whatever your thoughts on digitalisation, preparing for Making Tax Digital for ITSA is a big challenge facing UK accountants. With few software options available at the moment, it may feel too soon to begin preparations. So, with the public beta program not likely to kick off in earnest until after the next Self-Assessment season, what can you do now to get started? We have 3 ways you can prepare for MTD for ITSA!
1 Find your perfect software provider now
We’re already into the second half of 2021 and that means many practices will be planning ahead for the run-up to January’s Self-Assessment season.
It may feel a bit like shopping for Christmas gifts in August, but a little foresight now will make a huge difference when the busy season comes around.
The difference this year is that you’re also shopping ahead for the following Christmas too!
When you’re researching your options for Self-Assessment software this year, think short and long-term. Look for software that provides what you need both before and after MTD for ITSA mandation. Consider how the software integrates with the other tools you use, future development plans and the developer’s relationship with HMRC; all of this gives you a good understanding of future suitability.
2 Get your clients used to keeping digital records
MYTH: To keep digital records, you’ll need to use software that’s compatible with MTD for ITSA, as you’ll also need to send these records to HMRC via a digital link.
HMRC says: Digital records can be kept in a range of compatible digital formats. They do not all have to be held in the same place or on one piece of software. For example, a spreadsheet can be a component of digital record keeping provided the product that consolidates records or summary records from the spreadsheet is digital. (Q&A on MTD for ITSA)
When we began developing our MTD for VAT module it was vital we created a solution that worked for any situation – including legacy record-keeping systems and Excel – so that our customers can comply with MTD rules without breaking the bank over the cost of software.
As part of that initial design phase for VAT, we also began learning from our pilot customers. It was clear to us that however long you think your clients will need to get used to digital record keeping and digital submission, they will actually need longer!
It’s looking likely that this will be the case for MTD for ITSA too. Your clients aren’t likely to sign up for full MTD submissions under the pilot scheme but that doesn’t mean you can’t start the process of keeping good digital records now – that means no more shoeboxes and no nasty surprises after mandation!
The work now will pay off later so put a plan into place to educate and trial digital record-keeping outside of digital submission so you aren’t overwhelmed by everything in April 2023.
You could start by sharing this infographic in your next newsletter.
3 Use business-as-usual in January 2022 to your advantage
In the run-up to the busy season and during January, accountants in practice find themselves pinging information back and forth with clients more often than at any other time in the year.
Make the most of the opportunity, and prepare some materials to attach to those emails. You’re almost guaranteed that your client will take a look at what you’re sharing with them in the context of their tax return work.
You could create an FAQ page on your website, a PDF to attach to emails or even an Excel sheet with pre-written statements so that you can quickly copy and paste repetitive information into your comms.
You can also ask for the information you need from your clients ahead of MTD for ITSA as part of your request for information this tax season. It’ll give you a much better chance of getting the right details the first time and avoid multiple chaser emails into 2023.
By breaking the journey to MTD for ITSA up into smaller steps, you and your clients will find the transition much easier.
- Switch to Self-Assessment software that works for your practice now
- Choose a software developer (like us!) that plans to add MTD for ITSA
- Create a set of resources to make educating your clients easier
- Start encouraging good digital record-keeping practices with your clients
We’d love to connect with you and explore how BTCSoftware can help your practice with Self-Assessment and Making Tax Digital for ITSA.