As accountants, we have been hearing about MTD for long enough to know that choice has been removed and the new way of (quarterly) reporting is a legal requirement. But what about our clients who are price-sensitive or reluctant to new ways of working? It seems our role is ever expanding beyond the numbers, making it challenging keeping up with change and communicating with our clients.
Where to start?
HMRC are still holding their cards close to their chest, but with just 20 months before the mandatory April 2024 adoption, that approach doesn’t necessarily help firms, or their clients take the first steps. There can, understandably, be reluctance around starting the ball rolling only to find out it is in the wrong direction.
There is one thing scarier than moving in the wrong direction… Standing still!
But we don’t need to worry about that. We have enough information from HMRC’s latest consultation and various software providers to make small steps on the right path.
Segment your client base
You will have heard this time and time again, if you didn’t do it for MTD for VAT, here is your second chance.
From experience, those firms who knew which categories their client fell into found the process of communicating and converting a lot easier.
First, you need to know which clients are going to have to adhere to the new requirements. You can segment them as granularly as you wish at this stage (e.g., all plumbers or landlords) which is a good idea when it comes to communications – you can tailor any letter to them and their trade to help them understand.
NB: It’s a good idea to segment the landlords at this stage as a minimum due to the specific software on the market at a lower price point than most bookkeeping products.
Next, create a traffic light system. Green for those who will be easier to convert, or potentially already a system that is expected to be compatible. Amber for those who will need more support and guidance.
Red for the clients who are likely going to need bridging software or outsource (ideally to you). At this stage internally, it is important you have software that allows this.
Embracing Technology
As we just mentioned, many clients are going to want to look at outsourcing some of the work to you, some may be happy doing it themselves – either way, the technology you adopt is key!
This doesn’t just apply to which software is right for MTD in April 2024, but also the software you adopt generally across your practice. The latter is important to ensure you are creating capacity ready for the volume of work coming. Look at your entire firm’s ‘app stack’ and how it can be improved to allow your firm to be more efficient.
There will be a lot of noise in the MTD for ITSA space which means time researching, trialing, rolling out and training (clients and your team) on new software.
We are also to help you make the right choice for you and your clients.
Overcoming Objections
We know from MTD for VAT that blaming HMRC can make conversion easier. Afterall, clients cannot deny that they now have a legal obligation.
Unfortunately, this approach will only work on a certain number of clients and if it does it will come with further objections such as ‘If I am moving onto cloud software does my year end bill go down?’ It can catch you off guard and isn’t the best way to build a client relationship.
Instead of trying to get by the standard objections of price, time and change, try explaining the benefits of using digital systems. Plus, this is a fantastic opportunity for you to move into the advisory space with clients as having up to date financials is invaluable.
Success
There will be a lot of sole traders looking for an accountant around this time, more pro-active firms may want to introduce a tab on their website or a mailing list to allow affected clients (and prospective ones) to stay abreast with latest information. Whether you are looking for new clients, looking to add more services to existing ones, or create a more valuable firm with the view to exit – software is the way forward.
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