With around 3.5 million self-employed people and landlords coming under MTD ITSA from April 2024, the volume of data collated and coded every three months will be huge.

As an accountant or bookkeeper, the need to be as streamlined as possible is not just about efficiency.

It’s about being able to cope.

Given that digital record keeping is at the heart of the requirements, the first thought has to be introducing automation for the client that will make a real difference.

Here’s what we discuss in this blog:

1. Dealing with lots of standardised data
2. Providing line item breakdowns, and creating completeness
3. Purchase ledger automation

1. Dealing with lots of standardised data

Given the size of the cohort involved with MTD ITSA, there will be a lot of variations in terms of the type and frequency of both income and expenditure.

However, there is likely to be a great deal of consistency for each individual client depending on their particular trade. Expenditure for freelance designers might include some travel, software licenses and cost of materials, while those in construction might incur vehicle, tools, and protective equipment costs.

Landlords in particular are likely to have both income and expenditure that varies little from quarter to quarter.

Putting simpler types of business at the top of the list for review at the end of each quarter should mean you can get them submitted to HMRC quickly and relatively easily, particularly if you can be sure all the data is there to review promptly.

Sharing a general approach to automation with clients, involving tools like AutoEntry to help bring in the records from a variety of digital and non-digital sources, will go a long way to make this process as easy as possible.

However, looking at things on a client-by-client basis will bring added rewards, and it’s worth looking at a number of different options.

2. Providing line item breakdowns, and creating completeness

The key to getting everything right is data collection at the earliest point. This is one of the reasons AutoEntry exists, of course, and using it means that the digital process can start at the earliest opportunity, with the smallest change and input from the client.

Taking a photo of a receipt, which is then automatically turned into a digital record that can be coded correctly, already removes much of the manual work.

But, having a line by line breakdown means a greater degree of accuracy and completeness to the data which can ensure that the correct amount of tax can be calculated.

Over many invoices and receipts, and then over many clients, the advantages for an accountant are clear: the more that automation can be seen to be making a positive difference to time spent per client, the greater the ability to push more volume through with confidence that the system and your service will scale.

3. Purchase ledger automation

Depending on the level of consistency of the suppliers used by your clients, purchase ledger automation can be used to reduce the level of manual coding even further.

Teaching AutoEntry how to handle invoices and receipts from certain companies means that the preparation time can be further reduced, leaving you to do the final checking before sending it to the ledger for reconciliation.

As these rules are taught and not presumed, you retain control over how the automation works, and how you want it to work moving forward. This level of control is essential to building trust, and means that you can add-in your professional experience and knowledge of the client directly into the automation rules themselves.

Conclusion: From the simple to the most complex client needs

Given that HMRC is requiring an unbroken digital chain from digital record to submission (that is, digital linking), it is in effect already requiring automation in any MTD ITSA process. It’s certainly difficult to create digital links otherwise.

As automation at its most fundamental is about removing tasks that gain no extra value by being done manually, firms can use this to their advantage in helping to build sustainable services (in terms of effort and time required) moulded to suit each client.

Moving from a position of just being able to cope with the new regime, to being able to create a reliable pattern that can be recreated profitably as more clients are added, is the ideal way forward.

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