Our first face-to-face Xerocon in several years was fun and joyous, but the tone – while optimistic – was serious.

Tobacco Dock, the venue for Xero’s big UK event, was far different venue to that of a hotel conference room. What were old storage rooms became pods for Xero’s app exhibitors (including AdvanceTrack); while the central courtyards provided much relief against the heat, creating a carnival-like atmosphere.

However, the context was a stagnating economy, high inflation and a cost-of-living crisis. And of course, MTD ITSA. Can accountancy firms act as ‘digital consultants’? asked Xero’s UK and EMEA managing director Alex von Schirmeister.

Sole traders and micro businesses are the seed for creativity and graspers of new models to serve markets. And they want accountants to support them in that journey of growth. So… can you, as an adviser, steer them through the compliance hurdles they face? And, then, develop that relationship to offer timely and strategic support?

It’s not easy. MTD is proving to be a moving feast. The practitioners we spoke to at Xerocon are looking at ways to make both themselves, and their clients, ready as soon as possible. They don’t want nasty surprises when MTD ITSA goes live. But, unfortunately, we’re still waiting on some of the fine detail.

Xero’s big launch was Xero Go – a ‘freemium’ app to create an entry point for the millions of sole traders to better manage and capture income and expenses data.

While it’s very early days, it’s clear that Xero Go is one of the steps needed to offer a quick and easy platform for the smallest businesses to begin the vital process of capturing that information.

Accountants have so much on their plate. Being a ‘digital consultant’ requires a very important first step – understanding your own tech and processes. Your clients need help to both understand how to capture information – but, where automation isn’t possible, to get in the habit of opening up Tax Go, or whatever other capture tool is used.

There is an argument that this flow of extra information to HMRC will be of little use to the taxman. However, as we’ve suggested previously: building more links, consistently, between client and adviser should be a good thing – at least something that the practice can leverage.

We’d love to help you manage the increase in scale of client touchpoints – it’s what we do for a living. If you’d like to speak to us about improving your practice’s processes and workflow, contact us here.

You may have heard of the term ‘KYC’, which means ‘know your client’. But what about ‘KYP’? And how does that relate to Making Tax Digital ITSA? OK, enough of the cryptic acronyms.

We know that Making Tax Digital for Income Tax Self-Assessment (that’s the MTD ITSA bit) comes into force for the tax year beginning in April 2024. Basically, sole traders and landlords will have to start making multiple filings to HMRC, replacing the singular filing that takes place at the moment.

There is an ever-increasing focus on accountancy and small business software vendors to have ‘solutions’ in place to help accountants and their clients cope with the change.

But, as is always the case, while technology is a vital tool in helping the business world operate there are many steps to be taken on the road to running smoothly and efficiently. And this is where the other acronyms come into play.

KYC is more of a regulatory reference than a business strategy. The terms came into play for financial services organisations – do they really know who they’re working with? Whose funds they are transferring? It broadly covers anti-money laundering policies.

Some accounting practices will be managing such client verification. But… the term ‘KYC’ could easily apply more fundamentally to knowing who your customer is, how they work with you, and how they operate in the normal course of running their business.

And then there’s ‘KYP’… which could well mean ‘know your practice’. Do you understand how your practice operates? For example, do you have unique processes for each client, or just a few? And how efficient are those processes… can they be compared? Have you checked that they’re the best way to work with those client subsets?

You may think to yourself: How does KYC and KYP relate to MTD ITSA? Without understanding how your practice works with its clients, or stress-testing the number of different ways you work with them (and how this can be streamlined or reduced). then you’re missing a fundamental number of steps prior to implementing the right tech to help you manage the huge tranche of extra filings that will follow MTD ITSA’s introduction.

Without knowing how your practice works, your clients work, or how you work together, it will be difficult to leverage technology to support you through this major tax filing change.

Vipul Sheth is MD and founder of AdvanceTrack Outsourcing. If you’d like to speak to Vipul and his team about improving your practice’s processes and workflow, contact him here.

It’s been quite a week for the accountancy profession. It’s been one in which (I hope) AdvanceTrack has played its part – and I hope some certainty has been provided to outsourcing as a critical part in the profession’s future.

The second week of May saw what were the first ‘unrestricted’ major events for accountants take place in the UK since Covid-19 struck.

We hosted our AdvanceTrack conference on 10 May, which then led into Accountex across 11 and 12 May.

Technology tends to ‘leap forward’, certainly when it comes to its use in professional services. And there are a number of reasons for that, but primarily it comes down to firms becoming ‘used’ to doing things in certain ways, for certain clients.

For the accountancy profession, change is iterative and focused on the client i.e. keeping up to date with the latest accounting and tax legislation and their impact. Every so often, the changes put in place are seismic enough to drive firms to change how they do things. The push for online tax filing over the past 20 years has seen paper-based returns (almost) a thing of the past.

More recently, disruption came in the form of the pandemic, which required us all to embrace digital communication beyond just emails.

The conferences held last week were enormous fun and also insightful. Meeting people face-to-face always is, even more so after such a long hiatus. The AdvanceTrack conference’s theme was about you, your team and your practice growing. Discussion about ‘value-added’ services was never far away.

MTD to advisory?

Accountex was very much of a similar vein, there was plenty of discussion around ‘how can I manage Making Tax Digital for Income Tax Self-Assessment?’

I believe that growing your practice, while ‘dealing with MTD’ can be dealt with in similar ways. And that’s because the issues are similar. For advisory services, broadening your offering requires efficiencies and process – these in turn free up resource to get to know existing (or new) clients better – to have the conversations that open the door to new things.

MTD certainly isn’t as much ‘fun’ – or, it seems on the face of it that there’s not a lot of positives to be gleaned from many of your clients increasing the amount of reporting they have to undertake. Your people are not in a position to quadruple the amount of prepping and checking they can do. However, increasing the number of touchpoints with a client could well pay dividends longer-term if you can leverage that communication towards your service proposition.

Firms need to recruit both number-crunchers and those who can provide further analysis and ultimately higher-value services. For us at AdvanceTrack, we see our offering as critical in supporting practices – whether it’s gaining efficiencies or scaling up your service (both are interlinked).

Our tech and people enable firms to solve their recruitment woes, keep on top of new tech and processes, and ultimately providing the best client service. Don’t let the people war, or MTD, drag your practice down. Join the many others that are growing their offering by growing their links with us.

I’d be delighted to talk about what they’re doing and how you can do it too. Book a call. 

Vipul Sheth is founder and MD of AdvanceTrack Outsourcing

Who will benefit from Making Tax Digital (MTD)? Well, there’s an obvious answer…but I thought it a good idea to do a quick check.

Using LinkedIn’s clever polling tool I put the question out there: ‘who will benefit the most from the introduction of MTD for the remaining self-assessment taxpayers?’. The options were: accountants; bookkeepers; clients; or HMRC. You can see the poll, and some of the commentary it created, by clicking here.

Six out of ten respondents chose HMRC as their option. It’s unsurprising that an HMRC-driven project, which aims to both improve and increase the data it receives from sole traders, landlords and partnerships, would be flagged up as one in which they get the best results. It’s fair to point out that increasing the number of filings that the smallest businesses are making five-fold makes them a difficult choice among the other options. Indeed, only 11% picked them as the main beneficiary.

There are, too, big questions about how HMRC can utilise the data effectively, if at all. Some see it simply as a stepping stone towards an increase in the number of tax filings these taxpayers make. In other words, HMRC ultimately looking to get cash quicker.

But three in ten think that accountants and bookkeepers will fair best out of Making Tax Digital. Many accountants will shake their head at this – seeing benefits for bookkeepers to drive more regular client number-crunching but little for the accountant to benefit from.

Making Tax Digital for self-assessment tax doesn’t, in itself, ‘create’ better data. But it will push end clients in a direction to use software to manage their expenses and invoicing. MTD doesn’t ‘create’ better bookkeeping, but they might find a way to standardise their workflows so that most of their clients do things in the same way.

Making Tax Digital doesn’t ‘create’ a better accounting practice, but there’s absolutely no doubt that firms’ workflows and processes need to be polished, reliable and backed up with transparent information about their clients’ filing status.

If I was to be mischievous, I wonder if HMRC might benefit the least. Perhaps the tidying up of micro businesses’ books, alongside what I imagine would be more communication between client and accountant, might see this tranche of taxpayers able to better mitigate their tax.

It is, therefore, conceivable that all parties may find benefits from this digitisation movement.

Vipul Sheth is MD and founder of AdvanceTrack Outsourcing. If you’d like to speak to Vipul and his team about improving your practice’s processes and workflow, contact him here.

We don’t really need to tell you that Making Tax Digital is well underway – it’s been at the forefront of most accountant’s minds ever since HMRC first announced their rollout plans two years ago. 

It has been the focus of most accounting events, many many talks, and countless webinars. But so far, there’s been a lot of negative rhetoric around tax going digital:. 

  • It’s coming
  • Better hurry
  • Biggest change to tax system in 20 years
  • If you’re not ready, you’ll face penalties.
  • How to make MTD pain free
  • Are you ready?

As an accountant and adviser there is a big opportunity in Making Tax Digital, and it’s all about how you frame this change to your clients. 

 

The benefit of Making Tax Digital isn’t digital tax

You might be finding it difficult to communicate the benefits of MTD to your clients because you feel like it’s a burden to ask them to step up and do more, more often. 

It may feel like the only benefit you’re getting from MTD is that it’ll keep your clients on their toes. It’s a good excuse to hammer home that they can’t be late submitting records to you, but little else. 

 

Reframe the value

MTD has big business benefits for your clients. That benefit to them isn’t that tax is going digital. They don’t care about the formalities of submissions – that’s your remit. The benefit is the value they’ll get from moving their accounts over to the cloud.

  • It’ll eliminate their fear of costly mistakes
  • They can transform the productivity of their business and better prioritise their time
  • They’ll be able to predict issues before they arise
  • They’ll cut costs and will have more available cash 
  • They’ll have the tools to grow their business
  • They’ll be in complete control of their business as it does grow

Not to mention that moving to cloud software allows your clients to have an upgraded relationship with you. You’ll become more like a strategic business partner than an accountant. 

 

Your confidence transfers to your clients 

For many business owners, Making Tax Digital is a blip on their radar. They’ve got lots of other things to think about to keep their business running day to day. They’ll likely be leaving all the MTD stuff in your hands, and putting their confidence in you, because you’re the tax expert.

That means that you need to have confidence in the value you’re delivering, rather than fearful of the implications of HMRC demanding more. If you’re scared about your ability to deliver, your message will be wrong. 

The thing is – you can deliver it! You likely already are…

Think about your best client – one who’s already moved to cloud software and seen success. Think of how it has transformed their business. You know the value, because you’re seeing it in the work you’re already doing for your clients. 

You just need to look beyond the features of cloud accounting – the apps themselves or the ease of bookkeeping. Instead think about the emotional benefits – less anxiety, more confidence, more time at home, more control, more money, more status. 

Many of you will already know and be using some form of pricing and onboarding software. Whichever platform you use for generating proposals and automating the process, what these products are really offering Accountants is a tool to price consistently, sell more confidently and grow more profitably. 

What are the top three emotional benefits of moving to the cloud, specific to your clients? Create your next conversation around those next time you talk about tax going digital. 

And if you want further accountability in creating those relationships with clients, then talk to us about our Growth Academy, designed to help you move away from deadline driven work and become a master of deep, systematic change.