MTD and how purpose will help you handle more work

The rollout of Making Tax Digital (MTD) has accountants asking one question: “How do we absorb five times the work without charging five times the fee?”

Filing quarterly updates plus a final submission means there is much more to do. This is especially true when you think that around 780,000 sole traders and landlords will need to comply with MTD for Income Tax Self Assessment (MTD for IT) for the first time this year. The vast majority will rely on their accountants.

But a massive fee multiplier is out of the question, despite this jump in volume.

The power of purpose

As accountants, we will have no choice but to cut through the noise and stay focused.

You can do that by connecting all that you do through a clearly defined purpose. Only then can you gain greater control and unlock capacity.

This guide will show you how.

About this blog

This blog is designed to help you absorb the pressures of MTD and many other challenges accountants are facing. It draws on insights from our webinar, Connected by purpose: empowering the modern accounting firm. In it, we discussed the full challenge accounting firms face. We also looked at how the right purpose and systems drive success.

In this blog, we will explore:

• The real pressures facing accounting firms right now, from talent shortages to regulatory change.
• The MTD challenge in numbers, and what a fivefold increase in client touchpoints actually means for your team.
• Why purpose matters, and how it drives better decisions under pressure.
• A technology-powered framework built around three principles: clarity, control and capacity.
• Three practical steps you can take this week to start getting ahead of the curve

We’ll include thoughts from two experts who joined me on the webinar:

• James Jarman, a Partner at PE-backed accounting firm Galloways Accounting
• Fiona Barnett, an Account and Relationship Manager to Top 100 firms at IRIS Software Group

What are the real pressures on accountants right now?

The pressure caused by MTD is being worsened by other developments taking place this year:

• 94% of firms say talent shortages are constraining their growth (Source: Advancetrack Accounting Talent Index ).
• A Hays salary survey found 93% of accounting employers experienced skills shortages.
• Accountancy Age identified at least twenty significant regulatory changes taking effect this year, from ECCTA identity verification to new UK GAAP standards and AML fee hikes.

But despite the pressure, some firms do feel like they’re winning. They are connecting people, processes and technology.

How your fees are diluted under MTD

Even in quieter times, it’s hard to balance admin with fee-earning. The ICAEW Benchmarking Survey found that median chargeable hours per fee earner are just 773 per year against a target of 1,000 to 1,200. Meanwhile, Silverfin found that accountants lose about 1.2 hours every day to low-value admin. This is caused by chasing documents, duplicated data entry, and reconciling information across systems that don’t talk to each other. That means the industry loses about £5.3 billion worth of billable hours a year.

So how does MTD fit into this painful cycle of underutilisation and burnout?

To measure MTD for IT’s impact, consider an accounting practice with 200 qualifying clients. Under annual filing, that’s 200 interactions a year. But under MTD for IT, with four quarterly updates per client and a final submission, that becomes 1,000 interactions.

Unfortunately, the answer isn’t just “hire more people” because, as we saw earlier, Hays says there are major skills shortages.

How accounting firms can drive performance with purpose under MTD

Purpose will decide whether an accounting firm struggles or succeeds under MTD.

Firms that have a clear purpose make better decisions under pressure. They retain people. They say no to clients that are a bad fit, and they say yes to the best. They adopt change faster because the team understands the “why” behind the “what.”

It’s important to think of purpose as structural to your practice. It becomes especially important when a firm is going through change. That could be an acquisition, a technology migration, or when adapting to regulatory or compliance changes, such as MTD.

How to escape from a legacy mindset that holds firms back

Being willing to adapt to changing times is an important sink-or-swim moment. The present reality is your purpose, not what worked before. “We all like our comfort zones, but there’s danger in that,” James Jarman, Partner at Galloways, says. “If you’re unwilling to adapt to changing times, you can really struggle to progress.

“Those who embrace change do really well, whether that’s in their careers, their client engagement, or their technology engagement. Those are the ones that drive the business forward.

“But those that shy away from that really struggle.”

Putting a powerful structure in place – building capacity without headcount

Many firms have more capacity than they realise. James explained that visibility comes from two types of information: the tangible and intangible work people do.

First, consider the tangibles: timesheets, chargeability, and recoverability. “Are staff spending the right amount of time on the job?” James said. “If you’ve got a team that is spending far too long, it’s a retraining matter. But if you’ve got a team that is maxed out while spending the right amount of time, then it’s a resourcing matter.”

Next, what intangibles exist that can help your firm when adapting to new challenges? “There are members of the team that perhaps don’t bill the most or aren’t the most chargeable, but what they bring to the team far supersedes any amount of work they put down on paper. It might be that they’re the one that takes the temperature in the room, the one that looks out for their staff, trains, mentors or guides them through the changes or the one that protects other employees or clients when things are not in a good way. The value of these ones should not be underestimated, especially during periods of change.”

Meanwhile, looking at your own workload as a leader is still important. “Delegate properly – make sure that those in your team are taking up the slack, so that it maximises the amount of time you spend with your clients.”

Investing in important, non-chargeable activity

Activities like training on software features, sponsoring internal champions, and researching best practices are essential investments. “It needs a very conscious decision from the leadership team to allow that to happen and to support it,” Fiona Barnett, Account and Relationship Manager at IRIS Software Group, said. “Because ultimately it is an investment in those people’s time to make sure they really understand what they’re doing.”

How processes can provide better control for accounting firms

When times are tough, it’s easy to blame the wrong things. Slow-to-respond clients and rule changes are common examples. But in practice, it’s poor document management that slows many UK firms down.

For every hour partners spend on client advisory, they spend 1.5 hours on internal admin. Only 14% of partner time goes to strategic planning (source: Silverfin). That’s despite more than half of firms listing growth as their primary objective.

To make things worse, add MTD into the mix. Quarterly compliance multiplies workloads and exposes every process gap. If your client onboarding is inconsistent, you’ll feel it four times a year. If data capture happens at year-end, you’re building quarterly returns on incomplete information.

Documents need to be uniform, and all point towards the process of delivering for your client. For example:

• Do all clients fill in the same paperwork?
• Are your document naming conventions consistent?
• Is there any documentation that is missing?

Then you can focus on the tech and check whether your document management system integrates with your workflows.

If any of those things are broken, everything downstream slows. However, firms that get document management right can capitalise on MTD thanks to greater efficiencies.

Don’t forget to check the purpose of your software

Technology is next on your checklist. It should give you clarity and control while adding a third thing – capacity. If it’s not providing those three things, it’s adding complexity. If that’s the case, consider removing it.

How does software provide the capacity accountants need?

The best software tackles capacity issues head-on through AI and automation. That way, time-wasting tasks disappear from your workload. From auto-populating tax forms and processing high volumes of work to spotting issues, software should handle all the routine work and many of the checks.

That way, you can focus on giving chargeable, valuable advice to clients.

How much time can you save? It depends on your vendor choices. With IRIS, you can be up to 64% faster than leading alternatives.

Don’t forget that services can help you, too

Beyond software, accountants can save time with the help of services. Good outsourcing, for example, offers compliance support that can work with the solutions you have.

Saving time should not mean a race to the bottom

James highlighted a critical risk in how firms respond to being more efficient. If software makes them faster, should they charge less? “What gives me concern is that it will be a race to the bottom in terms of price if I can do what once took me an hour in five minutes.

“I can charge a much lower fee, but really this perspective should be flipped: if I can now do that hour-long job in five minutes, how do I spend the other 55 minutes adding value? How do I enhance the service for our client, ensuring they are benefiting from our expedited advice in the best way?”

James believes the results will follow: “The clients will appreciate that more. They will pay your fees on time. And they’ll really appreciate the advice and the value added to their businesses.”

Getting started today – your action plan with a purpose

If I were sitting in a practice right now, the three things I’d do this week are:

• Have an honest conversation with your leadership team about where your capacity is going. Map it. Measure it. The data will surprise you.
• Pick one broken workflow and fix it, end to end, before you tackle anything else.
• Audit your tech stack. In particular, look at how it connects workflows. The gaps between systems are where your time vanishes.

Find out more

If you found this guide helpful, our full webinar covers much more ground. It discusses everything above and more, including several topics we couldn’t fit here.

Watch Connected by purpose – empowering the modern accounting firm, to explore:

• Where disconnected systems are quietly costing you time, capacity and control.
• How leading firms create breathing space without hiring more people.
• Why MTD highlights process gaps – and how to address them proactively.
• How shared visibility improves decision-making and advisory conversations.
• Practical steps to better connect people, processes and technology in your firm.
• How private equity is reshaping the partnership model.
• AI in practice – what responsible use looks like.
• The hidden efficiency gains already sitting inside your tech stack.
• Succession planning and lessons in change from real acquisitions.