Despite the April 1st 2019 deadline for Making Tax Digital (MTD), companies are struggling to prepare for the huge leap to digitization of tax processes. Findings from a survey conducted by the Associations of Accounting Technicians (AAT) concluded that 63% of the surveyed accountants remarked that their clients affected by the new scheme will not be fully equipped by the beginning of April. The VAT element is particularly daunting as business heads may face fines if they don’t make the transition by then.
MTD is loaded with a number of significant challenges and hence piling workloads can be expected. Accountants will have to support their clients in shifting their accounts online and assist with quarterly planning along with managing their bookkeeping services, taking care of their self-assessment tax returns and accounts outsourcing. Overall speaking, it is a mammoth task that lies ahead of them and they need all the help they can receive.
Here are a few guidelines to keep your clients up to speed on the new system:
- Set up an agent services account: As an agent services account is specially meant to act on behalf of the company with respect to all MTD activities, it can be used for all HMRC services going ahead. Accountants should be careful while setting up this account for their clients as the account might have already been set up in order for them to access the Trust Registration services. Larger practices should set up their ASA’s centrally. Accountants and accounts outsourcing companies must ensure before client registration that they have MTD compliant software, pending VAT returns have been submitted, client’s data is up to date and sign up is done two weeks before the VAT due date.
- Figure out the clients who will be impacted by MTD for VAT: Accountants should make a list of clients who they have to migrate to digital bookkeeping. It has been made mandatory that those with VAT revenues around 85,000 pounds have to shift their records to a digital database. It will help them understand which clients are impacted, how many are compliant and which of them require an MTD compliant solution.
- Communicate the changes to clients: Communication is key in getting clients up to speed on MTD. They should be updated on all the relevant changes and the different processes should be explained to them in detail. Informing clients as soon as possible is vital so that accountants don’t lose their customers to their competition in midst of this transition.
- Find compatible software: The selection of MTD compatible software depends on the current level of the client’s technology maturity and business model. Cloud accounting software is helpful in this regard as a lot of companies have already started using cloud accounting software where data is stored on an external server and can be accessed real-time. However, the software should be MTD compliant and HMRC approved.
Considering the huge effort that is required to meet the peak demands, now it is time for accountants and accounting outsourcing companies to focus on how they can acquire people and resources to face the challenges ahead.