2024 is looming large in the sights of all accountants. There is plenty of conversation about whether or not HMRC will be able to deliver on their revised timetable but that shouldn’t be a major part of our thinking. MTD is here and its progression is committed, regardless of timetable. If our firms and people are not already prepared for it then we certainly need to be getting there soon.
The digitalisation of our systems and processes is a key element in our ability to deliver in the new compliance regime. Turning ‘once per year’ into ‘four/five times per year requires a big step up in our efficiency levels if we are to meet demand and keep client costs under control. The marketing budgets of the software providers have now kicked in and the tech solutions to this challenge are there for all to see. We have plenty of choice.
Whilst the talk of tech meeting MTD is prevalent, the solution is at least out there. For the accountant it may involve time and cost in acquisition, updates and training but the answer is there. The accountant simply needs to make the decision.
I asked a room full of accountants this week what their ‘real’ challenge was when it comes to MTD and, of course, they all came back with the same answer…clients!
Technology may fill the advertising space but, no matter how good your tech and systems are, if you have to continually chase clients for their records, and if those same clients don’t get serious about the accuracy, completeness and timely processing of their data, then your firm is not going to cope with the additional workload. It’s going to get messy!
HMRC have told the UK government that it will take, on average, 6 minutes for an accountant to process, check and submit a client’s quarterly return. 6 minutes!
Now, the technology exists today that will play its part in that happening. With real time client data, cloud based accounting and direct filing, that 6 minutes is technically possible.
Of course, in the real world we have ‘too busy’ clients and ‘incomplete records’. This is the real barrier.
Incomplete records may have worked for the accountancy business model for 500 years but in a world of real time data and enhanced deadlines, they no longer cut it.
For MTD to be a success, we are going to have to change the mindset and behaviour of your average client. They are going to have to take their responsibilities far more seriously when it comes to the integrity of their bookkeeping and accounting systems. They are going to have to start listening to us and taking our advice seriously!
If we are to change the behaviour of clients then we are going to need to look at ourselves and our teams first. We are the people who have allowed incomplete records and poor client response times to persist until now. I accept that much of that is for good reason, and I’m as guilty as the next accountant, but we have played our part in our own downfall. We are going to need to get tough!
MTD is the accountant’s version of Thor’s hammer. It gives us the power to change the way that things have been done by giving a very dramatic reason for change. Clients surprised by our more forceful, “we need to address you records once and for all” approach will understand and respond to the dangers that lurk for them behind MTD more readily than us selling the benefits of cloud accounting and digitalisation. We can give them the positives of better financial management but most are going to need to understand the upcoming pain of not sorting themselves out if they are to act.
We have a window of opportunity in the lead up to 2024 to sort out our client data once and for all and to remove the weight of incomplete records. We must seize it.
To do so will take 5 steps:-
- Prepare to stand your ground. What is your argument for no longer entertaining clients with incomplete records or poor response records? (clue: it’s in the article)
- Instigate a client education programme for 2022/23 – “MTD and why your data has to be right”
- Instigate a client training programme for 2022/23 – “Why your data really matters and how to make it work for you”
- Instigate a client support programme for 2022/23 – “We’re here for you and will support you through change”
- Instigate a client elimination programme for 2023/24 – those clients who don’t co-operate and will be too time consuming or costly to support in 2024.
For those of you nervous about getting tough with your clients, remember this:-
- They are, on the whole, nice people. You don’t want those who aren’t!
- They trust you. You’ve possibly never made it important enough for them in the past so they’ve focused on other priorities. Now, it’s important!
- They value the relationship with you. They will recognise the digital disruption in our profession in the same way that it is effecting theirs. They know that times are changing and they have to change to. If they’re not prepared to change then you can’t help them!
- This is good for them. They will see the benefits not just from managing MTD but in the enhanced performance of their business as, together, you make use of better data.
Time to sort out those records!
Good luck.
About the Author
This article is by Richard Brewin, Joint Managing Director, Progress BB. Experienced mentor, coach, facilitator and speaker, specialising in owner managed professional accountancy firms.