Accountants understand their clients’ data, often better than the client does

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) will place additional burdens on those impacted and the accounting and bookkeeping community who are best positioned to help them.

As any accountant will agree, even the most intelligent and articulate clients may not necessarily have the interest, skill or knowledge to keep accurate and up to date financial records. Especially to the standards required for meaningful MTD ITSA quarterly updates.

Leaving these self employed and landlord clients to their own devices therefore may be creating more repair and review work down the line.

Automating much of the collecting and categorisation of records, and being confident in its output will help reduce the pressure, especially if there are tens or even hundreds of clients to be dealt with each quarter.

Embedding professional experience in automation

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

Any application that can help in this process will be a distinct advantage especially if, like AutoEntry, you can convert paper documents into digital records, extract data emailed in, and fetch regular bills or statements.

However, it is your knowledge of the client, their trade and their pattern of working which means you can inject insight and experience to enhance this further. By creating rules, and teaching the system 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, so 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 require.

Adapting to changes

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

Changes of revenue patterns (for example if more trade is done online), seasonality, change in major supplier or where trade is completed, can all impact on the financial mechanics of the business and how records are maintained.

Changes to VAT rates, as has happened to help certain businesses during the pandemic, can similarly impact - so 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 the 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.

Let the machines do the heavy lifting, but you retain 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.

Focus your team’s attention and skills to where it is most needed.

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. 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.

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.