MTD ITSA presents new opportunities for accountants; but 1 in 10 set to bow out of profession
Vast majority of accountants (83%) see MTD ITSA process as an opportunity to gain clients
However, just one in three (34%) are “very confident” about the MTD ITSA process
34% say they’ll need to seek additional support from software firms, and 31% will seek support from HMRC
While one in 10 will sell their business due to demands of MTD ITSA requirements
London, UK - 1 September 2022
A new study[1] from global technology platform, Intuit QuickBooks, has found that while the vast majority of accountants (83%) do see Making Tax Digital (MTD) for ITSA* as beneficial to their business, just one in three (34%) are very confident about the process – and nearly six in 10 don’t even know when it comes into effect (59%).
Less than half (41%) of accountants surveyed knew that MTD for ITSA regulations come into effect in April 2024 - although this has sinced changed to April 2026 for incomes over £50,000 and 2027 for incomes over £30,000 (read our guide on MTD for ITSA for more information). This may be of no surprise given that just 32% said they fully understand the requirements.
When surveyed at the time, the continual delays to the legislation so far had led 31% of accountants to believe the deadline will be further pushed back. At the end of December 2022, this proved true with an announcement that MTD for ITSA would be postponed to April 2026 for those with incomes over £50,000 and 2027 for those with incomes over £30,000.
Securing business opportunities Despite almost all accountants surveyed (93%) claiming to know which of their clients need to be compliant, it’s clear that the industry and HMRC must use the next 18 months to adequately educate accountants about the upcoming changes.
Putting accountants in the driving seat on MTD ITSA will be an important way to encourage business growth – 85% say that their current client base is open to making the necessary changes, while a further 83% say MTD ITSA is an opportunity to gain clients.
One in three (32%) plan to proactively outreach to prospective clients, while one in five (20%) expect more clients to proactively outreach to them. In addition, almost half (44%) agree the new rules will open up new customer segments, driving organic growth.
More expert guidance needed to see ITSA success The anticipated business growth is positive news, but without more confidence and understanding among accountants – and more clarity from HMRC – these business opportunities won’t materialise.
More than a quarter (29%) say they’ve previously worried about a lack of clarity and communication on the process and timeframes of MTD ITSA, with some key concerns being the financial costs (32%), the level of change required (30%), and a lack of support from HMRC (26%).
For some, these obstacles are too much to overcome, with 11% saying they will sell their business due to MTD ITSA and an additional 7% saying they are set to retire because of the changes.
To help them capitalise on the opportunities MTD ITSA presents, more than a third of accountants will still seek additional support from software firms (34%) and from HMRC (31%). Over half (55%) say that ITSA has affected their software choices and have already or intend to change.
Nick Williams, Director, Intuit QuickBooks ,said: “It’s positive that so many accountants see MTD ITSA as a business opportunity – and that they’re ready to face the changes head on despite not feeling as confident as they’d like. Increased support from both HMRC and software firms will be essential, to help them successfully assist clients to meet the requirements and to grow their client base. Software providers should aim to offer always-on guidance and help from experts to make this boom in business a reality for accountants.”
Simon Brook, Managing Partner, Broadbents Accountants LLP, said: “After so many delays and complex changes to the requirements, it’s no wonder MTD ITSA has many accountants confused. At Broadbent, we rely enormously on the support and expertise of the QuickBooks team to help us make sense of how to tackle new legislation, meaning we can spend our time helping our clients and growing our business.”
Sources
[1] Study of 501 UK accountants and decision makers who work at accountancy firms which have clients who complete Income Tax Self Assessment forms conducted between 21.06.22 - 28.06.22. This study was commissioned with Censuswide. Censuswide abide by and employ members of the Market Research Society which is based on the ESOMAR principles.
* The mandatory deadline for Making Tax Digital (MTD) for Income Tax has been moved from April 2024 to April 2026. The government announced on Dec 19th 2022 that they are pushing back the deadline on MTD for ITSA to give landlords and individuals who are self employed more time to prepare.
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