Making Tax Digital: from compliance concern to real opportunity

A lot of discussion around Making Tax Digital has been about compliance. That’s understandable; you and your clients have to keep HMRC at bay.

But now, Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is months away. If you want continued growth, it’s important that your firm looks beyond being compliant.

So, is there an opportunity to add value for your firm and your clients with MTD for ITSA?

A quick reminder on where we are with MTD for ITSA

HMRC is about to roll out the first post-pilot phase for MTD for ITSA.

That means:

1. Clients with an income above £50,000 must switch from April 2026.
2. Clients with an income between £30,000-50,000 must switch from April 2027.
3. Clients with an income between £20,000-£30,000 must switch from April 2028.

For MTD to be compulsory, the earnings that meet the threshold must come from self-employment, property or a combination of both. If a client meets the threshold via other income, MTD will not apply, even if some of the money comes from self-employment or property.

The MTD opportunity

If you have found keeping track of MTD tricky at times, how have your clients felt?

Plumbers, hairdressers, and countless others never dreamt about filing returns to HMRC. That means the prospect of quarterly updates is even more daunting.

This new development might even be a shock; they probably feel as if MTD has likely changed from rumour into a reality very quickly. MTD for ITSA is your chance, then, to stand out as a proactive problem-solver.

At first, you’ll be their oracle on all things MTD. Then, as time progresses, the quarterly updates mean closer working than ever before.

The more you learn about the client, the more value you can add.

When that happens, they will consider you less a service and more a familiar face – a reliable advisory partner in mutual growth.

One well worth paying extra for.

The importance of communicating with clients

How can we start this process of becoming a go-to source of reassurance and insight?

You need to communicate with your clients.

Make life easier for yourself by segmenting them based on their MTD for ITSA needs. Tailor your communication to ensure every client understands MTD at the right time.

For example, those who have an income over £50,000 need to be armed with knowledge straightaway. Others need some grounding, but it’s less urgent.

Once you have your priority list, send out regular updates in order of relevance. Don’t assume that one email will suffice.

Remember, everyone reacts differently to different lines of communication. Use a variety of channels (e.g. emails, phone calls, and face-to-face meetings) to keep clients engaged.

Set expectations

Be honest about MTD for ITSA changes.

Let your clients know that MTD will require new processes, but also reassure them that you have a plan.

Outline the steps you’ll take together and set realistic expectations. Clearly explain what will change, the benefits they will enjoy, and the new responsibilities they will have.

Offer training

Some clients will be more tech-savvy, others will have taken a “receipts-in-a-shoebox” approach to supplying income data in the past.

But everyone now needs to use approved software. That means it’s worth organising training so everyone is comfortable with the technology.

This not only eases the transition but also builds extra rapport and trust.

With that in mind, think of training as time well invested. Consider hosting live webinars, creating guides, and providing one-to-one support.

Efficiency is king

Just because you bring the insight doesn’t mean the quarterly updates should be a major burden for your firm.

What you want to offer your clients is advice they are willing to pay for. To do that, you need to free up time so you can take a closer look at their finances.

With that in mind, use technology to your advantage. However, don’t fall into the trap of adopting every new tool that comes along. Be cautious of vendors who promise that their solutions will solve all your problems. Not every tool is necessary or beneficial. Evaluate new technology critically and avoid getting lost in the noise around MTD solutions:

• Focus on making the best use of the tools you already have.
• Ensure that your team is comfortable and proficient with your existing systems before considering new ones.
• Evaluate new software based on its functionality, user-friendliness, and compatibility with your existing systems. Conduct thorough research, seek recommendations, and test software before making any commitments.

Refine processes

Take this opportunity to review and refine your workflow. Map out your processes and identify bottlenecks. By making changes now, you’ll be better prepared for the increased workload that comes with MTD. Set up clear processes for data collecting, reporting, and submission so things stay consistent and accurate.

Engage your team

Your team is your greatest asset, so reach out to them as well as your clients.

Involve them in transitioning your practice to MTD so they feel they own the process. Encourage them to share ideas and suggestions for improvement. Provide training and resources to help your team stay updated with MTD requirements.

Beware the pitfalls

At this point, you have put good systems in place, and you’re also keeping everyone up to date. However, there are still some things that can go wrong.

Client resistance

Some clients may resist the changes that MTD brings. Be patient but firm. Make it clear that these changes are not optional and explain the benefits. Provide extra support to those who need it.

Address their concerns empathetically and highlight the long-term advantages of MTD compliance.

Complacency

MTD is an ongoing process, and staying updated with the latest developments is crucial. Regularly review your systems and processes to ensure that you are always compliant and efficient.

Establish a routine for monitoring compliance deadlines, updates from HMRC, and changes in legislation.

Remember

It’s easy to think of MTD as simply another new set of regulations. However, it is probably best to view its rollout as an exercise in change management. It’s about carefully coordinating with stakeholders to set up positive systems, behaviours and outcomes.

Don’t forget, we have a whole MTD hub ready for you. There are free guides for your firm and for your clients – we’ve got all the hints and tips you need, all in one place.

Click here to visit the hub.