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

Edna B. Shearer

With Making Tax Digital for VAT in entire swing, for accountants, attention is turning to the subsequent phase of MTD: Building Tax Electronic (MTD) for Cash flow Tax Self Evaluation.

This is at times referred to as MTD for ITSA.

The principles are straightforward, but it’s after once again heading to be the accountancy profession acquiring their noses soiled at the proverbial coalface in aiding clientele adapt—especially tens of millions of sole traders who are over the £10,000 threshold.

In this report, we emphasize some factors that may possibly assistance kickstart your procedures when it will come to supporting all those people.

Here’s what we address:

Why accountants ought to commence preparing their sole trader customers now

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

  1. Transitioning to accounting computer software, if they haven’t previously. Alternatively, sole traders may possibly use some kind of bridging remedy if they insist on utilizing spreadsheets (whilst taking steps to be lawfully compliant with the digital linking rules, of course—remember that copy and pasting numbers into a spreadsheet from elsewhere will almost certainly be lawfully prohibited).
  2. Switch to electronic document-holding for their earnings tax accounting relating to self-employment, which includes compliance inside of all processes linked to this (e.g. knowledge seize from files these types of as invoices or charges), again in the requirements of electronic linking.
  3. Foundation interval reform for sole traders, for the minority that calls for it. It could theoretically be essential for a small business to implement this for the tax yr 2023/24.

Setting up must start off now mainly because just about every ingredient in the above checklist is likely to need time and methods. As mentioned, some of the deadlines requiring motion could be here incredibly soon.

For most techniques, the extremely to start with job will be to phase their shopper lists according to these standards. That in alone will be time-consuming.

At the time that is finished, tactics need to devote means close to educating and utilizing. And this will be a continuous process up to and even outside of the get started day of MTD for ITSA in April 2024.

This situation is complicated by the pursuing, which will have to be taken into account throughout any planning:

  • Some sole traders will also be landlords, so they might have to also use MTD for ITSA for residence profits even if their sole trader earnings is underneath £10,000 (that is, their sole trader moreover rental profits is increased than £10,000).
  • General partnerships be part of MTD for ITSA in April 2025, so will involve their own education and onboarding procedures primary up to that time. It’s not nevertheless crystal clear when other cash flow tax-paying out individuals and corporations will be required to indication up to MTD for ITSA but, if MTD for VAT is a guideline, this will likely be staggered throughout the yrs pursuing 2024. In other terms, MTD for ITSA is persistently heading to have to have organizing and resources, maybe all the way to the end of the decade.
  • Foundation period of time reform affects all sole traders, not just those over the £10,000 threshold for MTD for ITSA, so the filtering for that individual task need to be drawn from your full sole trader shopper foundation.
  • These below the MTD for ITSA threshold could nevertheless get hold of you and demand enable when they understand of MTD for ITSA (e.g. from advertisements). Although the answer may perhaps be uncomplicated for these customers, it will continue to take in time and means. In other phrases, the times pursuing an HMRC mail-out might established your telephones on hearth!

Make certain your purchasers have an understanding of the worth of adopting the compliance modify sooner fairly than later. Shift now and the price tag stays the similar, but shift later and they’re very likely to incur larger expenses.

Encourage your consumers to take edge of any pilot strategies, these as that obtainable for MTD for ITSA.

Remember that they will require suitable software, as will you if you wish to maximise your provider supplying for them.

Recommendations to talk the variations to sole traders

When converse of digitalisation in accountancy is nothing new, procedures that are willing to embrace chopping-edge systems are going to accomplish efficiencies when it arrives to conversation.

Without utilizing these technologies, techniques danger becoming overcome.

So, let us get a search at a couple suggestions—starting with the a lot more progressive way of driving engagement.

Instagram/Facebook Live

Virtually all your clients will have social media accounts of some type, and your observe will with any luck , currently have its individual social media existence to hook up with this.

Facebook Stay (also on Instagram in a broadly very similar way) is simply just a way of broadcasting stay online video, just like a information reporter on Television set.

Viewers are limited to commenting (and you can approve opinions ahead of they’re noticed), but you also can share polls and screen world wide web backlinks (e.g. to HMRC web-sites that clarify a lot more).

You can reside broadcast from a mobile phone or computer, or use the Reside Producer software program for a far more expert strategy.


It might no for a longer period be chopping edge but using Zoom or Microsoft Groups to host an online webinar suits inside of quite a few people’s convenience zones presently, next the enforced complex migration caused by the pandemic.

Due to the fact these are effectively on line conferences in all but identify, invitations can be scheduled within just Zoom or Microsoft accounts and despatched to clients, which can boost engagement.

They can be interactive, and the webinar can be recorded also so that you can let entry at a later on date, deriving additional benefit from your function.


Through e-mail or printed and posted, newsletters remain a critical way to communicate with clients about all varieties of challenges. They are less straightforward than videoconferencing in today’s planet, however, for the reason that, you’ll need to have to make certain you continue being GDPR compliant.

In other text, individuals usually need to opt-in to get e-mail or newsletters. But email newsletters in individual have had a resurgence lately, and men and women are not as resistant to them as they once had been.

And the rest…

The Pareto principle suggests 80% of success normally occur from 20% of the energy.

In conditions of basic training for a practice, it’s the modest factors that generally get the job done finest.

Tack a mention of MTD for ITSA onto every single incoming or outgoing client phone phone, for instance.

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

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

Place a banner on your web-site mentioning it, and how you can help.

Put this problem out to your personnel to see if you receive any progressive answers based mostly on the peculiarities of your exercise: How would they distribute the word about MTD for ITSA?

MTD for ITSA rewards for your sole trader shoppers

With any luck, quite a few of your existing customers demanded to use MTD for ITSA will presently use a cloud accounting option. If so, there is a excellent possibility this will be MTD-completely ready in time for April 2024, while the consumer will need to have to sign up for MTD (or you can on their behalf), plus swap on the MTD performance within just the software.

Bear in mind that MTD for VAT and MTD for ITSA are two completely different considerations—accounting software program with MTD for VAT currently activated won’t routinely be activated for MTD for ITSA.

People utilizing older desktop-dependent software may possibly want to seek out an improve.

Equally, the enhance route for these relying on spreadsheets may be a minor bumpy, with a require to implement compatible bridging plugins for the spreadsheet application.

For individuals who are not applying application, you really should emphasise the benefits of accounting program that you are going to presently know about—a 24/7 check out of dollars movement, for example, so they usually know the place they stand.

This way customers can spot complications coming, as very well as see possibilities when they come up.

But it’s significant to emphasise more recent systems much too.

Automating lender reconciliation, for example, is reworking business admin by massively reducing the volume of time taken to match payments in opposition to invoices.

Similarly, receipt capture suggests getting very important MTD-required info into the client’s accounting will become a piece of cake—just snap the receipt or invoice with a mobile cell phone straight just after order or receipt of the products.

And don’t ignore perhaps the greatest boon for any accountant—linking customer accounting to your possess techniques, so you can see their reside financial knowledge.

This permits for you to develop new price propositions all-around periodic test-ins, for illustration. This reveals how MTD for ITSA is ultimately a enterprise opportunity for practices.

Closing views

MTD for ITSA may experience like some time away.

But as an accountant, you have to start arranging instantly.

Sources and price range requires to be allotted, and the sheer scale of the perform should be quantified. This may possibly truly feel like the early phases but you know from encounter with MTD for VAT that key dates will be below just before we know it.

Transferring forward, wise tactics are by now building performing parties that meet often and set ambitions so that milestones can be obtained.

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