Making Tax Digital for Income Tax (MTD IT) is changing how self-employed individuals and landlords maintain their financial records. While the move to digital reporting aims to provide more accurate and timely information, many accountants are struggling to find resources to deliver the regular bookkeeping and accounting work needed to achieve this.
Outsourcing offers a practical way to complete digital record-keeping accurately and on time without stretching internal teams.
The Digital Record-Keeping Challenge
MTD IT requires affected taxpayers to:
- Maintain digital records
- Submit quarterly updates to HMRC
- Use compatible software at all times.
For accountants looking to maintain records on clients’ behalf, this means:
- Contacting clients throughout the tax year to ensure the accuracy and completeness of data
- Supporting clients who are historically hard to reach
- Absorbing the additional costs of maintaining records
As the scope of MTD IT is widened in future years, accountants relying on in-house resources will struggle to maintain records effectively.
What Are Outsourced Record-Keeping Systems?
Outsourced record-keeping systems involve:
- Collecting transactional data and supporting information each month using an offshore resource
- An offshore resource maintaining cloud accounting software using secure logins on behalf of a client
- Dedicated offshore bookkeepers and accountants to deliver MTD IT work
- Standardised workflows aligned with MTD IT requirements, designed by the offshore team
- Resolving any inconsistencies or missing data with clients
Onshore accountants remain responsible for MTD compliance, review of work, and client relationships. The offshore accountant takes on the resource intensive tasks required by MTD IT.
How Outsourcing Simplifies MTD IT Record-Keeping
1. Consistent, MTD-Ready Information
Outsourced teams work to agreed turnround times and quality standards to ensure:
- Transactions are correctly recorded using compatible cloud-based software
- Digital records are complete, accurate, and fully reconciled
- Quarterly submissions to HMRC are submitted on time using reliable data
By offshoring record keeping tasks to a dedicated resource, the scope for errors is reduced and compliance is assured.
2. Less Pressure on Internal Teams
Rather than stretching existing staff to take on responsibilities to obtain data from clients and update records, outsourcing:
- Frees up accountants to undertake work to support clients and generate additional fees
- Eliminates the costs of recruitment and training
- Smooths workloads as quarterly deadlines approach.
When structured correctly, outsourcing works as an extension of the onshore team – aligned to existing processes, software, and quality standards without the risks of a permanent appointment.
3. Improved Client Experience
Many clients struggle with ongoing digital record-keeping. Outsourced systems:
- Reduce the pressure on in-house teams to contact clients for missing data
- Ensure digital records are maintained accurately and on time
- Help clients stay compliant.
As accountants shift resources away from recurring tasks they have more time to focus on client relationships, tax advice, and business development.
4. Scalable Support as MTD Expands
From April 2028, any individual with self-employed or landlord income above £20,000 will need to meet MTD IT requirements. To meet the projected demand for record keeping services, accountants will need to:
- Scale capacity quickly as client numbers grow
- Support quarterly peaks of work
- Update processes as HMRC requirements evolve.
Outsourcing offers a scalable, flexible solution that allows accountants to quickly increase capacity without the overheads and administrative burden of full-time or temporary appointments. Outsourcing work enables accountants to stay agile, efficient, and competitive throughout the year and has advantages over the maintenance of records in-house:
| In-House | Outsourcing |
|---|---|
| High costs of employment for permanent staff | Flexible, scalable support – pay for the resources needed |
| Ongoing training and supervision needs | Pre-trained specialists focused on record keeping tasks |
| Internal capacity limits growth | Access to a deep pool of resources to scale quickly |
| Cost of developing and maintaining systems | Streamlined, standardised processes |
Is Outsourcing Record-Keeping Right for Your Firm?
By working with a specialist outsourcing partner, accountants can:
- Access resources immediately: Offshore accountants are proficient in commercial accounting software and are ready to start immediately
- Avoid recruitment costs and HR management: The outsource provider handles contracts, salaries, and employee benefits
- Leverage expertise: Offshore professionals are up to date on the detailed requirements of MTD IT and required records
- Scale flexibly: Add capacity as demand grows without the risk of recruitment delays. Where demand falls, services can be scaled down without any exit costs.
Outsourced systems are particularly effective for accountants:
- Supporting sole traders or landlord clients
- Looking to scale and expand MTD IT services
- Looking to protect margins while remaining competitive
- Struggling to support clients with high volumes of transactions.
Initor Global: Your Offshore Accounting Partner
Outsourcing MTD IT work to Initor Global offers many benefits to UK accountants through:
- Helping clients comply with HMRC requirements.
- Reduced risk of penalties for late/missing submissions
- Reduced costs and overheads
- Access to talent and resources
- Increased quality and consistency of work
- Better turnaround times
- Improved client experience
- Data security assurance.
Free trial offer
If you want to learn more about how outsourcing can simplify MTD IT, explore our Making Tax Digital for Income Tax hub and book a free 10-hour trial with Initor Global. We promise to turn your trial work around within 72 hours. You can book a video call with one of Initor Global’s expert advisors using this link or send an email to [email protected].
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