When it comes to their tax affairs, clients come in all shapes and sizes according to their employment status, their income sources, whether they own their own business, even their net worth. But while these things undoubtedly affect the work you do for them, the tax return process for all self-assessment clients is currently very similar, and all of them revolve around a single, annual 31 January deadline.
Under MTD, things will be different. Income thresholds and exemptions mean that different clients will require quite different workflows.
MTD client categories
Here are four of the possible client categories that we have identified:
- Category 1 – Clients that fall under MTD, with no other income. These clients will be required to quarterly report 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 quarterly report 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 quarterly report 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.
Although this isn’t an exhaustive list, we believe it covers the main categories of client that you’ll need to consider.
Your practice may already have processes and workflows that you apply to different types of client, so think about how these might change under MTD when you’ve added in the effect of having distinct, MTD-based client categories. Think about how your practice can engage with the different client categories as we move towards the start of MTD.
Our customers can make use of the powerful reporting functions in Wolters Kluwer software to help them categorise clients and plan their own MTD implementation timetable. What facilities does your software have to do this?