MTD: Your 5 steps to success: Part 1
Making Tax Digital is the biggest immediate challenge facing accountants across the UK and, with many still trying to get to grips with it, we’re giving you a big helping hand. The team at IRIS have broken down the essential stages into our 5 step programme. In part 1 of our blog series to accompany this, we look at…
1. Profiling Clients
Adapting to MTD may be intimidating and overwhelming. It can, however, be a great opportunity to pause, review and reflect on how your practice is operating and then re-shape it to be more effective and profitable.
The first stage is to profile your clients – essentially carrying out a review. Working on this now will lead you to a far better place, ultimately, when MTD for VAT comes in April. You’ll see the opportunities and have a chance to grab them.
Profiling your clients is important because you’ll gain a deeper understanding of how you can streamline your base, see how you can optimise profits and what might be possible for the future.
As part of the profiling work, you should ask yourself:
What does the ideal client look like?
What proportion of the client base fits with this ideal client profile?
If you think your clients are all the same, you sell yourself short. It’s likely you have a broad range, with some who do bookkeeping already, some who are 100% paper based, some reliant on Excel and a mix of all of those in between.
Clients using bookkeeping are likely to take less time to support. You may discover that clients who are predominantly using paper will consume disproportionately more of your time and maybe you should consider charging a premium as a result. With encouragement, some clients may be happy to support you on this.
Your analysis may also show, for example, that much of your client base are due to be retiring in a few years’ time. That is going to be huge challenge but perhaps it opens up the possibility of offering additional services on pensions and succession planning?
Understanding your client base, you can then appreciate how much time and effort you need to put in. You’ll see what the types of clients are and how many fit into each category.
When evaluating your client base, you should aim to answer these questions:
• What services do clients require today and in the coming years? Could they benefit from new services that you could provide to them?
• Who makes submissions to HMRC (VAT, Corporation Tax)? Is it the client or accountant? In future, who should be making these in the post-MTD world?
• Could clients maintain their own records? What is the skill level of client base – could they maintain their own records? Are they willing to?
• When do clients need to make their VAT submissions – which clients are due in March and which in April?
IRIS can, of course, help you with all of your MTD requirements. For the profiling of your client base, IRIS users can use the Data Mining functionality, allowing partners to determine the number of clients registered for VAT, those above the threshold and when their submissions are due.
We would also recommend looking at Accountant Go, OpenSpace, Practice Management and AutoMail to help you begin sharing the key information about MTD for VAT with your clients. Create letters in AutoMail, share them with OpenSpace and use Accountant Go for a two way engagement.
Our team is here to help plot the appropriate route through MTD. E-mail them today at MTD@iris.co.uk.
Lastly, engaging directly with your clients and having conversations about MTD with them is clearly a key point. Have you done that yet? This can help further deepen your understanding of your client base and set you up in a great position to meet their future demands and needs, while complying with MTD for VAT.
Look out for part 2 of the series, coming soon, as we look at profiling your practice.