In an article published on 7 June, we explained how to identify the different client categories that MTD will create. This week we’ll be looking at how to put together a client communication strategy based on these categories.
Since that earlier blog article, we’ve been helping our customers to automate the process of categorising their clients by using their Wolters Kluwer software to generate the necessary reports. If you’re not using our software you’ll need to perform this work some other way, so it’s worth recapping on the four main client categories you need to look for:
- Category #1 – Clients that fall under MTD, with no other income. These clients will be required to report quarterly and also to provide an end-of-period submission.
- Category #2 – Clients that fall under MTD, with other income. These clients will also be required to report quarterly and to provide an end-of-period submission but, in addition, they'll need to report their non-business income as they do today on an SA100.
- Category #3 – Clients that fall outside MTD (because of the threshold) with no other income. These clients won’t need to report quarterly but they will need to report their business and non-business income as they do today on an SA100.
- Category #4 – Clients with no business income that fall outside MTD. Just as they do today on an SA100, these clients will need to report their non-business income.
(You can read the earlier article here.)
Affected clients will need to start reporting their business and/or property income quarterly for accounting periods that fall after 6 April 2018.
This is clearly a significant change in itself but it’s worth remembering that these clients may have other income, over and above that from businesses or property. As well as quarterly reporting, these clients will need to report this other income separately to HMRC by 31 January following the end of the tax year. Clients who fall in this category need to understand that they have two, entirely separate, annual reporting cycles going on after April 2018.
One of the challenges for tax advisors and accountants dealing with MTD will be leading your clients through all changes so they fully understand what’s expected of them and what they can expect from you.
Now is the time to start planning how to communicate this to your clients. This plan will prompt you to think about some key dates and deadlines that you need to set for the practice and will help you to crystallise your own thinking around MTD implementation.
- Your communication plan should summarise the information that each category of client needs to know.
- When deciding what to tell your clients, think particularly about how MTD will affect them and how it will change how you act on their behalf.
- Think about any activities you might want to organise to support your clients, for example in-house MTD events.
To help you develop this communication plan, in future blog articles we’ll be exploring the following topics in more detail:
- What roles and responsibilities will you and your clients agree to take on as you move towards Making Tax Digital?
- How will MTD impact engagement terms and fee structures currently in place and how will you explain these changes to your clients?
- How will the General Data Protection Regulation (GDPR) impact current processes and how will you engage with clients on this topic?
- What tools will you recommend to your clients to support their transition to MTD and the changing processes?
We’ll also be providing an example client engagement checklist.
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Wolters Kluwer Tax and Accounting customers should make sure they are registered to receive our customer-only eBulletins, containing practical tips on how to use their Wolters Kluwer software to get MTD-ready, by registering on our Support website.