With Making Tax Digital for Income Tax (MTDfIT) set to launch in April 2026, the landscape of personal tax reporting is about to undergo a significant transformation. HMRC is actively engaging with agents and taxpayers, highlighting the imperative to transition to digital record-keeping and quarterly online submissions.
While many accounting professionals are proactively preparing, a common concern revolves around the availability of resources to effectively support clients through this shift. This is where strategic outsourcing emerges as a powerful solution. To address the most pressing questions, we’ve compiled a comprehensive FAQ guide, designed to empower accountants in their journey toward a seamless MTD for IT integration.
Frequently asked questions about outsourcing MTD for IT
1. Can I delegate the ongoing maintenance of client records to an external partner?
Absolutely. Outsourcing allows you to entrust the regular upkeep of client financial data to a specialised partner. Utilising cloud-based bookkeeping or accounting software, these professionals can ensure real-time accuracy. For clients who rely on manual records, such as paper documents or bank statements, the outsourcing team can efficiently convert these into digital formats, maintaining up-to-date records within the chosen software.
2. Is it possible to outsource the actual submission of records to HMRC?
Yes, this is a viable option. When quarterly deadlines approach, your outsourced accounting team can leverage your practice’s HMRC-compatible software to facilitate the seamless submission of information. This ensures compliance and frees up your in-house team for more strategic tasks.
3. How does outsourcing handle clients with multiple income streams?
MTD for IT mandates the submission of income from both self-employment and property businesses. Therefore, individuals with diverse income sources must provide detailed information for each stream. If a client operates multiple trades or owns various properties, separate records are crucial, with quarterly totals being submitted to HMRC. Outsourcing partners are well-equipped to manage this complexity, ensuring accurate and compliant reporting.
4. What is the client sign-up process for MTD for IT, and how can I facilitate it?
HMRC will initiate contact with agents and affected taxpayers between March and May 2025. Agents and accountants can utilise their Agent Services Account for client enrollment, while clients can also sign up directly through their Government Gateway account. A limited number of individuals participated in HMRC’s private beta during the 2024/25 tax year, and the public beta will be accessible to all from April 2025.
5. What specific information is required for MTD for IT registration?
Each client's registration necessitates the following details:
- Business name
- Email address
- National Insurance number
- Business start date and registered address
- Accounting period
- Accounting type (cash or standard)
- The tax year for MTD for IT adoption
This information must be submitted on an individual client basis.
6. Can I outsource any part of the client sign-up process?
Indeed. Gathering client information can be time-consuming and challenging. An outsourcing partner can streamline this process by utilising your practice’s Customer Relationship Management (CRM) system to proactively contact clients for missing details, ensuring all necessary information is readily available for a smooth sign-up.
7. When are clients required to start using the MTD for IT service?
Individuals must begin using MTD for IT from April 6, 2026, if they meet the following criteria: they are registered for Self-Assessment, have income from self-employment or property (or both) before April 6, 2025, and have a qualifying income exceeding £50,000 in the 2024/25 tax year.
8. Can I extend outsourcing to other personal tax-related tasks?
Absolutely. With approximately 2 million taxpayers expected to utilise MTD for IT, the remaining 10 million will continue to file self-assessment tax returns via the traditional method. An outsourcing partner can assist in preparing these returns, maintaining supporting records, and calculating tax liabilities.
9. How can outsourcing alleviate workload peaks during quarterly submissions?
Accountants frequently encounter significant workload spikes during monthly bookkeeping, quarterly VAT return filing, and year-end account preparation. The annual self-assessment tax return period from October to January also presents a substantial burden.
With MTD for IT adding to this workload, outsourcing recurring tasks like bookkeeping, VAT return preparation, year-end accounts, and self-assessment tax returns can free up valuable time. This allows you to focus on providing enhanced support and complex tax advice to clients as MTD for IT becomes integrated.
10. What if I only require outsourcing services for MTD for IT periodically?
Flexibility is key. Outsourcing providers offer services on an hourly, part-time, or full-time basis, allowing you to tailor support to your specific needs. This approach is ideal for addressing backlogs or managing unexpected surges in demand.
11. What are the cost implications of outsourcing MTD for IT work?
Outsourcing offers significant cost advantages. Rates for bookkeepers and qualified accountants are often substantially lower than the cost of employing in-house professionals. Many outsourcing providers offer fixed annual pricing and flexible pricing models, aligning with contemporary accounting practices.
12. How can I learn more about outsourcing MTD for IT services?
Reliable outsourcing partners provide comprehensive bookkeeping, accounting, and tax services suitable for a wide range of client engagements. If you’re an accountant considering outsourcing for the first time, seeking to improve profit margins, and ensuring your clients meet their MTD for IT obligations, consider scheduling a consultation with an expert advisor. By embracing strategic outsourcing, accounting professionals can effectively navigate the complexities of MTD for IT, ensuring compliance, enhancing efficiency, and delivering exceptional client service.
Benefits of outsourcing MTD for IT
- Increased efficiency – Streamlines operations and reduces administrative burdens.
- Cost savings – Reduces overhead costs associated with in-house staffing.
- Enhanced compliance – Ensures accurate and timely submissions, minimising the risk of penalties.
- Scalability – Allows firms to scale their operations to meet fluctuating demands.
- Focus on core competencies – It frees up resources to focus on high-value advisory services.
- Access to expertise – Provides access to specialised skills and knowledge.
