Making Tax Digital for ITSA: How accountants can prepare sole trader clients

ByForest Midden

Jun 2, 2022 , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,


With Producing Tax Digital for VAT in full swing, for accountants, notice is turning to the upcoming period of MTD: Making Tax Digital (MTD) for Revenue Tax Self Assessment.

This is in some cases referred to as MTD for ITSA.

The principles are easy, but it’s after once more likely to be the accountancy profession finding their noses soiled at the proverbial coalface in serving to clientele adapt—especially tens of millions of sole traders who are higher than the £10,000 threshold.

In this short article, we highlight some things to consider that may possibly assistance kickstart your processes when it arrives to supporting individuals folks.

Here’s what we include:

Why accountants need to begin making ready their sole trader clients now

As far as most purchasers are involved, MTD for ITSA has numerous fronts for which sole traders should prepare:

  1. Transitioning to accounting software, if they haven’t previously. Alternatively, sole traders may well use some variety of bridging resolution if they insist on employing spreadsheets (although getting steps to be legally compliant with the electronic linking policies, of course—remember that copy and pasting quantities into a spreadsheet from somewhere else will probably be legally prohibited).
  2. Change to digital report-keeping for their income tax accounting relating to self-employment, like compliance in all procedures connected to this (e.g. information capture from files such as invoices or costs), yet again in just the needs of digital linking.
  3. Basis period of time reform for sole traders, for the minority that involves it. It could theoretically be required for a enterprise to put into action this for the tax yr 2023/24.

Preparing need to commence now due to the fact each individual ingredient in the over checklist is going to desire time and resources. As talked about, some of the deadlines requiring motion could be here very before long.

For most procedures, the quite initial position will be to phase their client lists in accordance to these criteria. That in itself will be time-consuming.

When which is performed, techniques need to devote methods around educating and employing. And this will be a continual system up to and even further than the commence day of MTD for ITSA in April 2024.

This scenario is challenging by the following, which ought to be taken into account for the duration of any scheduling:

  • Some sole traders will also be landlords, so they could have to also use MTD for ITSA for home profits even if their sole trader money is down below £10,000 (that is, their sole trader in addition rental profits is higher than £10,000).
  • Basic partnerships be a part of MTD for ITSA in April 2025, so will need their own education and learning and onboarding processes main up to that time. It’s not yet distinct when other revenue tax-spending people and firms will be demanded to signal up to MTD for ITSA but, if MTD for VAT is a guide, this will most likely be staggered across the many years subsequent 2024. In other words, MTD for ITSA is persistently going to demand arranging and means, possibly all the way to the finish of the ten years.
  • Basis period reform affects all sole traders, not just all those higher than the £10,000 threshold for MTD for ITSA, so the filtering for that individual process ought to be drawn from your full sole trader client base.
  • These underneath the MTD for ITSA threshold may possibly even now get in touch with you and call for assist when they master of MTD for ITSA (e.g. from ads). Even though the remedy may possibly be easy for these clients, it will however take in time and means. In other words, the days subsequent an HMRC mail-out may perhaps set your telephones on hearth!

Assure your consumers fully grasp the value of adopting the compliance modify quicker somewhat than later on. Go now and the value stays the same, but shift afterwards and they are likely to incur larger charges.

Motivate your clients to choose edge of any pilot strategies, this sort of as that obtainable for MTD for ITSA.

Recall that they will want compatible software package, as will you if you want to maximise your provider presenting for them.

Suggestions to connect the changes to sole traders

While converse of digitalisation in accountancy is almost nothing new, methods that are ready to embrace slicing-edge systems are heading to attain efficiencies when it arrives to conversation.

Without applying these systems, procedures danger staying overwhelmed.

So, let’s take a look at a couple of suggestions—starting with the a lot more revolutionary way of driving engagement.

Instagram/Facebook Reside

Nearly all your clients will have social media accounts of some sort, and your practice will ideally currently have its possess social media existence to hook up with this.

Fb Live (also on Instagram in a broadly comparable way) is simply just a way of broadcasting dwell video clip, just like a news reporter on Tv.

Viewers are limited to commenting (and you can approve comments in advance of they’re noticed), but you also can share polls and exhibit world wide web one-way links (e.g. to HMRC internet sites that clarify much more).

You can are living broadcast from a cellphone or laptop or computer, or use the Stay Producer program for a extra skilled approach.


It may well no more time be slicing edge but employing Zoom or Microsoft Teams to host an on the net webinar suits within quite a few people’s ease and comfort zones currently, next the enforced technical migration triggered by the pandemic.

Mainly because these are primarily online meetings in all but name, invites can be scheduled within Zoom or Microsoft accounts and sent to clients, which can improve engagement.

They can be interactive, and the webinar can be recorded as well so that you can make it possible for entry at a later on day, deriving more price from your get the job done.


By way of e-mail or printed and posted, newsletters remain a key way to talk with clientele about all sorts of difficulties. They are significantly less uncomplicated than videoconferencing in today’s world, however, simply because, you will require to make certain you keep on being GDPR compliant.

In other text, men and women ordinarily will have to opt-in to acquire e-mail or newsletters. But e mail newsletters in individual have experienced a resurgence not long ago, and persons are not as resistant to them as they after were.

And the rest…

The Pareto theory claims 80% of results usually come up from 20% of the energy.

In terms of general schooling for a observe, it’s the smaller things that typically do the job very best.

Tack a mention of MTD for ITSA on to just about every incoming or outgoing shopper mobile phone simply call, for example.

Add a quick paragraph box to the invoices you deliver out.

Have everybody increase a mention of MTD for ITSA to their email signatures.

Put a banner on your web page mentioning it, and how you can enable.

Set this concern out to your workers to see if you get any revolutionary responses dependent on the peculiarities of your follow: How would they unfold the phrase about MTD for ITSA?

MTD for ITSA advantages for your sole trader customers

With any luck, a lot of of your existing customers demanded to use MTD for ITSA will now use a cloud accounting resolution. If so, there is a superior opportunity this will be MTD-completely ready in time for April 2024, even though the shopper will want to sign-up for MTD (or you can on their behalf), in addition change on the MTD performance within just the software.

Try to remember that MTD for VAT and MTD for ITSA are two completely separate considerations—accounting application with MTD for VAT presently activated will not instantly be activated for MTD for ITSA.

These using more mature desktop-dependent software package may possibly need to seek an enhance.

Likewise, the up grade route for people relying on spreadsheets may perhaps be a small bumpy, with a need to have to apply compatible bridging plugins for the spreadsheet app.

For all those who are not applying software, you need to emphasise the advantages of accounting software that you are going to now know about—a 24/7 look at of hard cash stream, for illustration, so they often know the place they stand.

This way purchasers can place issues coming, as properly as see possibilities when they come up.

But it is vital to emphasise more recent technologies as well.

Automating lender reconciliation, for case in point, is transforming business admin by massively decreasing the volume of time taken to match payments from invoices.

In the same way, receipt capture usually means receiving crucial MTD-essential information into the client’s accounting gets to be a piece of cake—just snap the receipt or bill with a cell mobile phone straight right after buy or receipt of the merchandise.

And really do not neglect potentially the major boon for any accountant—linking consumer accounting to your possess techniques, so you can see their are living fiscal facts.

This enables for you to generate new benefit propositions close to periodic check out-ins, for instance. This reveals how MTD for ITSA is ultimately a business option for tactics.

Remaining thoughts

MTD for ITSA may possibly sense like some time away.

But as an accountant, you have to commence organizing right away.

Resources and funds needs to be allotted, and the sheer scale of the work should be quantified. This might sense like the early levels but you know from working experience with MTD for VAT that important dates will be below prior to we know it.

Transferring forward, smart practices are now developing working events that meet up with consistently and set plans so that milestones can be obtained.


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