Use Outsourcing to Deliver Making Tax Digital for Income Tax Services

The Resource Challenge

For accountants with sole trader and landlord clients, MTD IT presents an immediate challenge to deliver more work every month. For each qualifying business or income source, clients will need to maintain complete, digital records of income and expenses and submit a summary online each quarter to HMRC. While some clients may feel comfortable maintaining their own digital records, many will expect their accountant to deliver these services while minimising any increase in fees.

Compared to the annual Self-Assessment process, accountants must now ensure clients:

• Maintain complete digital bookkeeping records throughout the year
• Submit an accurate statement of income and expenses online to HMRC at the end of each quarter using commercial software
• Finalise the year-end position of each affected business
• Submit a full self-assessment tax return to HMRC covering all sources of income and allowances by 31 January

Hiring additional resources may seem like the obvious response to support clients. However, for many UK accountants, the current recruitment market presents a number of challenges, including:

• Skills shortages: Qualified bookkeepers and accountants are in high demand, and many firms struggle to attract the right candidates
• Rising recruitment costs: Advertising roles, shortlisting candidates, conducting interviews, and using recruitment agencies quickly add up
• Training and development: Newly appointed staff require onboarding and ongoing professional development
• Employment risks: Firms must manage compliance with UK employment law, contracts, employee benefits, and HR responsibilities
• Staff turnover: When a team member leaves, the recruitment cycle starts again, increasing costs and reducing productivity

As MTD IT client numbers grow, these factors can quickly affect the cost-effective operation of a Practice.

Outsourcing: A Scalable Alternative to Recruitment

Outsourcing gives UK accountants access to a broad range of qualified professionals without the risks of a permanent appointment. Most end-to-end accounting tasks – such as digital bookkeeping, VAT returns, year-end accounts, company tax, and personal tax – can be outsourced easily to trusted providers.

When structured correctly, outsourcing works as an extension of the onshore team – aligned to existing processes, software, systems and quality standards. By working with a specialist outsourcing partner, accountants can:

• Access talent immediately: Offshore accountants are already professionally qualified, proficient in commercial accounting software, and ready to start immediately
• Avoid recruitment costs and HR management: The outsource provider handles contracts, salaries, and employee benefits
• Leverage UK accounting expertise: Offshore professionals are trained in UK accounting, tax, and compliance requirements and are fully up to date with the detailed requirements of MTD IT
• Scale flexibly: Add capacity as demand grows without the risk of recruitment delays. When demand falls, services can be scaled down without any exit costs

Which Services Can Be Outsourced Under MTD IT?

Accountants usually seek to outsource recurring bookkeeping and accounting work, including:

• Monthly digital bookkeeping and transaction processing
• Bank reconciliations
• Quarterly MTD IT submissions
• Data validation and correction of errors
• Year-end accounts for sole traders and landlords
• Preparation of personal tax returns

Outsourcing offers a cost-effective way for accountants to communicate with clients while making the most effective use of any direct, human contact needed.

Key Benefits of Outsourcing MTD IT Tasks

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 or 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