The Ultimate Guide to Making Digital For Accountants

As an accountant, you are likely familiar with the Making Tax Digital (MTD) initiative by HMRC. MTD requires businesses and landlords to keep digital records of their income and expenses and submit quarterly updates to HMRC using compatible software. In this guide, we’ll take you through the key things you need to know about MTD for accountants, including how to prepare for MTD, choosing the best MTD software, and our top picks.

What is Making Tax Digital?

Making tax digital for accountants is an initiative by HMRC to modernize the tax system and make it easier for individuals and businesses to manage their taxes. MTD requires businesses and landlords to keep digital records of their income and expenses and submit quarterly updates to HMRC using compatible software.

How does MTD affect accountants?

As an accountant, MTD affects you in several ways. Firstly, you will need to ensure that your clients are keeping digital records and submitting quarterly updates using compatible software. You may also need to provide support and guidance to your clients on how to comply with MTD requirements. Additionally, you may need to update your own processes and systems to ensure that you are able to support your clients with MTD compliance.

How to prepare for MTD as an accountant

Assess your clients

The first step in preparing for MTD is to assess your clients. Determine which clients will be affected by MTD and assess their current record-keeping processes. Identify any clients who may require additional support or training to comply with MTD requirements.

Choose the right software

Choosing the right MTD software is crucial for accountants. Consider factors such as compatibility with HMRC, user-friendliness, integration with accounting software, automated record-keeping, and cost when choosing the right software for your clients.

Provide training and support

Provide training and support to your clients on how to comply with MTD requirements. This may include training on how to use MTD software, guidance on record-keeping processes, and support with submitting quarterly updates to HMRC.

Update your processes

Update your own processes and systems to ensure that you are able to support your clients with MTD compliance. This may include updating your accounting software, developing new procedures for MTD compliance, and providing training to your team on MTD requirements.

Choosing the best MTD software for accountants

When choosing MTD software for your clients, consider the following factors:

Compatibility with HMRC

Ensure that the software is compatible with HMRC's MTD requirements and can submit quarterly updates to HMRC.

User-friendliness

The software should be easy to use and navigate, even for those who are not familiar with tax requirements. The software should have an intuitive interface and provide helpful prompts and explanations.

Integration with accounting software

If your clients use accounting software to manage their finances, it's essential to choose MTD software that integrates with their accounting software. Integration allows for seamless data transfer between the two systems, reducing manual data entry and the risk of errors.

Automated record-keeping

One of the main benefits of MTD software is the ability to automate record-keeping. When choosing software, ensure that it can automatically track income and expenses and generate tax reports.

Conclusion:

MTD software can be cloud-based or desktop-based. Cloud-based software is accessible from anywhere with an internet connection and is often more cost-effective. Desktop-based software is installed on a single computer and is typically more secure. Consider your clients' needs and preferences when choosing between cloud-based and desktop-based software.

Making Tax Digital has transformed the tax landscape in the UK, requiring accountants to adapt to digital record-keeping and submission processes. By understanding the intricacies of Making Tax Digital, accountants can effectively guide their clients through this transition, ensuring compliance, enhancing efficiency, and providing valuable insights. Embracing best practices and staying proactive in supporting clients will enable accountants to thrive in the digital tax era.