MTD – When to Engage with Your Clients

The MTD pilot continues to progress, and we are nearing the time when the first quarterly submission can be made to HMRC. Whether you are taking part in the pilot or not, it may feel like mandation in 2023 is a long way off.  Although nearly two years away, it’s not too soon to start thinking about when to engage with your clients around MTD. 

Another way to view this time-frame is in tax return filing seasons.  If you have self-assessment clients where your only touch points are around the tax return completion process, you’ve probably already contacted them regarding receiving their 2021 data. This means your usual contact with the client, where you could discuss MTD, is now only this year’s signing process, before we get into the 2022 season. 

Planning how to talk to clients about MTD is a daunting prospect, particularly clients who today view tax compliance as an annual process, and that your relationship with them is an annual one. MTD for VAT introduced the concepts of digital record-keeping to a group of clients who already considered themselves ‘in business’. MTD for Income Tax now extends this concept to some clients who won’t currently view themselves as running a business. A full-time employee with rental income is now within the MTD quarterly process and must keep records digitally – most clients within this bracket won’t probably think of themselves as “business owners”. This client type is likely to need the most amount of education, advice and general hand holding to get them compliant. 

As daunting as it may be, there are some simple steps you can start thinking about to get the ball rolling. Here are some areas you can start focusing on:  

• VAT registered clients, will mainly have been covered by MTD in 2019 – they should be fine (either they are already doing digital record-keeping and used to quarterly submissions, or you successfully applied for the Digital Exclusion rules to apply). 
• Unincorporated traders not VAT registered – start to categorise them as either: “already digital record-keeping”, “potentially could keep own records digitally”, or “will need help keeping digital records”.   
• Landlords – categorise as above. 

For each category of clients, you now need to consider the best way of supporting them. Those who are already doing digital records need to understand what changes are coming, and when. Those who could keep digital records and aren’t doing so, will need your help with picking the right product for them – possibly having a list of preferred products that meet their needs will help to make their decision much easier.  For this latter category, potentially considering if your practice has scope to offer additional bookkeeping services.  

Once this initial part is complete, you can move onto deciding what communications to share with each client type and when. Here at Thomson Reuters, we’ve created a bundle of helpful resources such as; FAQ documents, help sheets and other client facing information to help you start your MTD journey.  Get in touch with your account manager to find out more.