MTD ITSA: How accountants and automation can create value

If you're not automating tasks for Making Tax Digital then you're missing out, and creating extra work for yourself. Read on to learn the essentials of automation that all accountants and bookkeepers need to know.

Keir Thomas-Bryant
Keir Thomas-Bryant

As every accountant will agree, even the most intelligent and articulate client may not necessarily have the interest, skill or knowledge to keep accurate and up to date financial records. This is going to become very important considering the higher standards required for MTD ITSA—quarterly updates (at least!), an end of period statement (EOPS) for each trade plus one for any landlord rental income, and then a Final Declaration.

Leaving self-employed and landlord clients to their own devices, therefore, might be to create reparative and review work further down the line. There’s an easy solution that already exists and is used by hundreds of thousands: Automating as much of the collecting and categorisation of accounting records as possible, and being confident in its output, will help reduce the pressure on both you and the client. And automation becomes astonishingly potent when combined with your experience and knowledge.

This will be especially true if there are tens or even hundreds of clients to be dealt with each quarter.

Here’s what we discuss in this article:

1. Introducing automation to clients

2. Creating and adapting automation for clients

3. Automation with oversight and control

1. MTD ITSA: Introducing automation to clients

As a professional you know what data is required. You know how it needs to be presented, coded and backed up with appropriate documentation.

Any app that can help in this process will be a distinct advantage—competitively for you, and for clients.

AutoEntry can convert paper documents into digital records, as well as extract data on documents emailed in.

However, where this becomes insanely powerful in the hands of an accountant is when it’s combined with your knowledge of the client, their trade and their pattern of working.

This means you can inject insight and experience to enhance further the already incredible benefits of automation. By creating rules, and teaching the app how to handle specific vendors or types of transactions, you can speed up the process through to reconciliation.

This might be to do with VAT treatment or nuanced coding, as one example. Your input in creating automation rules injects confidence and a level of sophistication into the system that can’t be bought off the shelf.

By taking a client-by-client approach, you can be sure that each is set up to meet the high standards you demand, clients expect, and HMRC requires.

2. MTD ITSA: Creating and adapting automation for clients

As a client’s circumstances evolve over time, so might their financial processes.

There may be changes in revenue patterns. More trade might be done online, for example, while seasonality, changes in a major supplier, or where trade is completed, can all impact the financial mechanics of the business and how records are maintained.

Changes to VAT rates, as occurred to help certain businesses during the pandemic, can similarly impact. Keeping an eye on the automation rules set up for clients will ensure that they can continue to be compliant and pay the correct level of tax.

Essentially, automation should be designed with adaptability in mind. Embedding your experience and understanding of the external factors influencing a business is a key component of ensuring the system is working with you and producing the right results.

Given the amount of data that may need to be checked quarterly under MTD ITSA, this level of automation is going to be increasingly important to building a sustainable service.

3. MTD ITSA: Automation with professional oversight and control

While it’s important to lean on automation, this has to come through establishing confidence that everything is working correctly, and that there are still checks and balances in place.

For example, retaining oversight of things such as automation rules means that as a service provider you know what is going on, and what the expected outcome should be. If things don’t look right, you should be able to pinpoint why, form a view of what has happened (is it an error or the nuance of a particular circumstance?) and make the necessary adjustments.

Oversight and control is where you act as the engineer to the system, rather than just a recipient of its processes and outputs.

It’s where you can be seen adding even more value, so focus your team's attention and skills to where it is most needed

But while software can make the job easier, it is not there to replace your professional judgement. This will come under real focus as MTD ITSA starts to bite and the volume of information coming is unlikely to be handled manually in any economical way. If there are limited resources then you and your team will need to be able to focus on the outputs and analysis, rather than ensuring the gaps in the ledger are filled.

AutoEntry: Maximise your client experience

Clients that use AutoEntry to take care of receipts, bills, invoices and other paperwork save time and improve accuracy. As their accountant, you get a head start with data that’s instantly available.

When it comes to MTD ITSA, AutoEntry is a necessity. Book a demo or try for free today to see how your workflow can be revolutionised.

Conclusion: Automation superpowered by accountant experience

Building in automation underpinned and controlled by your professional experience rather than just adding extra staff costs, is an important first step. It will help develop a robust and flexible MTD ITSA proposition regardless of the volume and inclination of your clients.

MTD ITSA is closer than we all might think, and starting now on getting clients ready is vital. Introducing automation at this ground-floor level is a key way to reduce the shock of what’s required, and guide clients to the very best outcome.

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