LONDON – 03 November, 2022: Almost 60% of accountancy practices believe MTD for ITSA will provide them with greater scope to focus on consultancy services for landlords.
The upcoming change in legislation means all landlords with an income in excess of £10,000 will have to file more frequent tax returns (quarterly as opposed to once a year) and keep digital records. By having access to up-to-date records of their landlord clients’ property finances, accountants will free-up the time spent collecting spreadsheets and receipts, enabling them to focus on providing higher value consultancy.
More than half (58%) of accounting firms see upcoming digital tax reforms as an opportunity to grow their landlord client base, research from UK FinTech Hammock has shown.
While the majority (67%) of firms believe they are a strategic partner to landlord clients, more than 60% of firms believe that managing their landlord clients with their current systems and processes will be ‘unsustainable’ when Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) comes into force in April 2024. In response, more than 60% of firms are planning a ‘broad digital transformation’ project to modernise their operations.
The poll of 150 accounting firms in the UK and 150 landlords, conducted by independent research house Censuswide, uncovered the preparedness of landlords and their accountants for the digital future.
Many practices ‘struggled’ with MTD for VAT changes by reacting too slowly and will be eager to avoid a repeat performance. That’s according to Hammock founder and CEO Manoj Varsani, who is calling on firms to start engaging their landlord clients as soon as possible.
“Accounting firms clearly recognise the opportunity that MTD for ITSA presents to upgrade their business to better serve their landlord clients. It is clear that lessons have been learned – and those that move to digital services sooner rather than later will reap the most reward.”
A large segment of the market has not started planning for a transition to MTD: two-thirds of accounting firms aren’t planning on making any changes in the next three months in preparation for the MTD deadline. One in five (20%), meanwhile, said they were not aware of MTD for ITSA.
Meanwhile, a third (33%) of landlords polled said they still use spreadsheets to manage their finances, with 12% reliant on physical files, citing end of year tax returns as their single biggest headache. In addition, almost a third (30%) do not yet use an accountant.