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

ByMargie D. Moore

Jun 4, 2022 , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,


With Creating Tax Electronic for VAT in full swing, for accountants, focus is turning to the subsequent phase of MTD: Producing Tax Digital (MTD) for Profits Tax Self Evaluation.

This is at times referred to as MTD for ITSA.

The procedures are straightforward, but it’s as soon as yet again going to be the accountancy occupation receiving their noses dirty at the proverbial coalface in helping clientele adapt—especially millions of sole traders who are higher than the £10,000 threshold.

In this short article, we spotlight some issues that may well enable kickstart your procedures when it will come to supporting these folks.

Here’s what we cover:

Why accountants should really get started planning their sole trader consumers now

As far as most clientele are worried, MTD for ITSA has quite a few fronts for which sole traders must put together:

  1. Transitioning to accounting software, if they have not currently. Alternatively, sole traders might use some sort of bridging resolution if they insist on applying spreadsheets (even though having measures to be legally compliant with the digital linking guidelines, of course—remember that copy and pasting figures into a spreadsheet from somewhere else will likely be lawfully prohibited).
  2. Swap to digital report-retaining for their cash flow tax accounting relating to self-employment, together with compliance within just all procedures related to this (e.g. knowledge capture from files these as invoices or payments), once again in the prerequisites of digital linking.
  3. Basis interval reform for sole traders, for the minority that demands it. It could theoretically be necessary for a enterprise to put into practice this for the tax calendar year 2023/24.

Planning ought to begin now because every ingredient in the earlier mentioned checklist is heading to demand time and sources. As mentioned, some of the deadlines demanding motion could be listed here extremely soon.

For most techniques, the quite 1st work will be to section their client lists according to these requirements. That in itself will be time-consuming.

As soon as which is accomplished, methods must devote means all-around educating and employing. And this will be a continual approach up to and even outside of the get started day of MTD for ITSA in April 2024.

This problem is complicated by the next, which ought to be taken into account in the course of any setting up:

  • Some sole traders will also be landlords, so they may have to also use MTD for ITSA for property cash flow even if their sole trader income is underneath £10,000 (that is, their sole trader additionally rental earnings is greater than £10,000).
  • Standard partnerships be part of MTD for ITSA in April 2025, so will call for their very own education and onboarding procedures major up to that time. It is not nonetheless crystal clear when other income tax-having to pay men and women and companies will be necessary to signal up to MTD for ITSA but, if MTD for VAT is a guide, this will likely be staggered across the several years following 2024. In other text, MTD for ITSA is persistently heading to need planning and methods, most likely all the way to the end of the decade.
  • Foundation time period reform affects all sole traders, not just all those earlier mentioned the £10,000 threshold for MTD for ITSA, so the filtering for that specific undertaking should be drawn from your complete sole trader customer foundation.
  • All those below the MTD for ITSA threshold might still contact you and demand assist when they discover of MTD for ITSA (e.g. from adverts). Despite the fact that the reply may be simple for these purchasers, it will nevertheless take in time and assets. In other words, the days next an HMRC mail-out may perhaps set your phones on fire!

Guarantee your clientele comprehend the worth of adopting the compliance alter sooner instead than afterwards. Shift now and the selling price stays the exact same, but shift later on and they’re possible to incur bigger service fees.

Stimulate your purchasers to consider gain of any pilot schemes, this kind of as that readily available for MTD for ITSA.

Try to remember that they will have to have compatible software, as will you if you wish to maximise your provider presenting for them.

Strategies to communicate the modifications to sole traders

Whilst speak of digitalisation in accountancy is absolutely nothing new, techniques that are prepared to embrace cutting-edge technologies are heading to reach efficiencies when it will come to communication.

With no utilizing these systems, practices threat being overcome.

So, let’s just take a search at a several suggestions—starting with the extra ground breaking way of driving engagement.

Instagram/Fb Dwell

Pretty much all your purchasers will have social media accounts of some variety, and your apply will with any luck , already have its have social media presence to hook up with this.

Fb Live (also on Instagram in a broadly equivalent way) is only a way of broadcasting stay video clip, just like a information reporter on Television.

Viewers are limited to commenting (and you can approve opinions before they are found), but you also can share polls and screen web backlinks (e.g. to HMRC web sites that describe additional).

You can are living broadcast from a phone or pc, or use the Dwell Producer program for a a lot more skilled method.


It may possibly no lengthier be slicing edge but employing Zoom or Microsoft Groups to host an on the net webinar fits in just numerous people’s ease and comfort zones nowadays, pursuing the enforced specialized migration triggered by the pandemic.

Since these are fundamentally on the internet meetings in all but title, invitations can be scheduled within just Zoom or Microsoft accounts and despatched to purchasers, which can strengthen engagement.

They can be interactive, and the webinar can be recorded also so that you can allow for obtain at a later day, deriving further more worth from your work.


By means of electronic mail or printed and posted, newsletters keep on being a vital way to connect with clients about all forms of troubles. They’re significantly less clear-cut than videoconferencing in today’s globe, however, simply because, you will want to guarantee you continue being GDPR compliant.

In other words and phrases, folks normally must decide-in to acquire e-mail or newsletters. But e-mail newsletters in unique have had a resurgence lately, and folks aren’t as resistant to them as they as soon as were.

And the rest…

The Pareto principle claims 80% of benefits ordinarily occur from 20% of the effort and hard work.

In terms of general training for a practice, it’s the little points that typically get the job done best.

Tack a point out of MTD for ITSA on to each and every incoming or outgoing shopper phone contact, for illustration.

Add a temporary paragraph box to the invoices you ship out.

Have every person insert a point out of MTD for ITSA to their e-mail signatures.

Put a banner on your website mentioning it, and how you can support.

Place this question out to your staff to see if you receive any revolutionary solutions based mostly on the peculiarities of your practice: How would they unfold the term about MTD for ITSA?

MTD for ITSA added benefits for your sole trader clientele

With any luck, many of your current clientele essential to use MTD for ITSA will already use a cloud accounting resolution. If so, there’s a very good chance this will be MTD-ready in time for April 2024, even though the customer will will need to register for MTD (or you can on their behalf), as well as switch on the MTD features in just the program.

Recall that MTD for VAT and MTD for ITSA are two entirely separate considerations—accounting application with MTD for VAT presently activated will not quickly be activated for MTD for ITSA.

Those making use of older desktop-based program may perhaps need to seek an enhance.

Likewise, the update route for individuals relying on spreadsheets may possibly be a small bumpy, with a require to apply suitable bridging plugins for the spreadsheet application.

For people who aren’t applying program, you should really emphasise the rewards of accounting application that you’ll now know about—a 24/7 perspective of cash movement, for case in point, so they normally know exactly where they stand.

This way purchasers can location difficulties coming, as nicely as see chances when they come up.

But it’s significant to emphasise newer technologies much too.

Automating financial institution reconciliation, for case in point, is transforming business enterprise admin by massively minimizing the amount of money of time taken to match payments versus invoices.

Similarly, receipt seize means getting very important MTD-essential details into the client’s accounting gets a piece of cake—just snap the receipt or invoice with a cellular cellphone straight following buy or receipt of the goods.

And do not ignore perhaps the most important boon for any accountant—linking shopper accounting to your personal programs, so you can see their are living monetary facts.

This allows for you to produce new value propositions all-around periodic examine-ins, for illustration. This displays how MTD for ITSA is eventually a business chance for procedures.

Closing views

MTD for ITSA may sense like some time absent.

But as an accountant, you have to begin scheduling straight away.

Means and budget needs to be allocated, and the sheer scale of the work ought to be quantified. This may truly feel like the early phases but you know from knowledge with MTD for VAT that vital dates will be here in advance of we know it.

Moving ahead, smart methods are by now building doing the job parties that meet routinely and established ambitions so that milestones can be realized.


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