MTD IT workflow guide for mixed-client practices (shoebox to digital-ready)

Most practices are dealing with mixed client bases when it comes to MTD IT. Some clients are already operating their bookkeeping through the cloud and barely need guidance, some work from spreadsheets and do need transition plans, and some still collect receipts in folders and are used to reconciling once a year. AccountingWEB’s analysis of how practices are approaching the MTD IT crunch makes it clear that the practices struggling most are those trying to apply a single type of workflow to all of their clients. The practices managing well have segmented their client base and have built a different onboarding approach for each group.

This blog is part of our series, Making Tax Digital for Income Tax: Your Complete Practice Guide to Multiple Cohorts, Workflows, and Compliance.

Let’s explain how this is done.

Segment 1: The shoebox client

The shoebox client keeps paper receipts, bank statements, and invoices in a folder (or a bag, or a drawer, or a shoebox) and brings everything to the accountant once a year. The problem with MTD IT is that the quarterly submission requires income and expenses to be recorded digitally throughout the quarter, not piled together once a year.

The migration path for a shoebox client is a staged shift:

• Step 1: Move bank feeds to a connected cloud bookkeeping tool so that income and expenditure from the bank account is captured automatically without manual entry

• Step 2: Introduce a receipt-capture app (like BrightCapture by Bright works) so the client just photographs receipts as they incur them rather than filing them for later

• Step 3: Review the records at the end of each month (not the end of the quarter) to catch gaps and categorisation errors so there’s no crazy pressure before the quarterly deadline

• Step 4: First quarterly submission uses the cleaner, more current records

The key is starting this migration before the first quarterly deadline, not at it. A shoebox client who has been using BrightCapture for two months before their first Q1 deadline is in a totally different position to one who is still filing paper receipts on the 6th of August.

Segment 2: The spreadsheet client

The spreadsheet client is digitally competent but not yet on a cloud platform.

They track income and expenses in Excel or Google Sheets (which they maintain reasonably well) and aren’t averse to technology, they just haven’t had a reason to change.

For this client, two routes are available.

• Route 1: Bridging software. This keeps the spreadsheet but adds an electronic link to an HMRC-recognised submission tool. This satisfies the digital link requirement of MTD IT without forcing a change to the client’s current bookkeeping habits.

• Route 2: Migration to cloud bookkeeping. This removes the manual linking step at each quarter and gives you a cleaner, more auditable record trail. The transition is more of a matter of changing where the data lives rather than how it’s structured.

BrightBooks by Bright is designed for exactly this client profile. It’s cloud bookkeeping that maintains records throughout the quarter for MTD IT and connects directly to the submission workflow.

Segment 3: The digital-ready client

The digital-ready client is already using cloud bookkeeping, connects their bank feed, and processes expenses regularly. For these clients, the quarterly MTD IT workflow should be largely automated.

The risk with digital-ready clients is over-engineering the process, such as adding manual review steps that aren’t necessary. The practices that manage digital-ready clients most efficiently have quarterly review that just confirms completeness and approves submission.

For this segment, BrightBooks by Bright with BrightCapture by Bright gives the client a frictionless way to add any additional expenses that aren’t captured through the bank feed (occasional cash purchases, petty expenses, personal card items) without breaking the otherwise automated flow.

Building a practice workflow that serves all three segments

The key to managing a mixed-client portfolio through MTD IT is having a workflow system that handles all three segments without maintaining three separate processes. That means:

• Client classification at the outset

• Segment-appropriate onboarding

• A single portfolio dashboard that tracks all clients regardless of their digital readiness, with status visible at the practice level

• A quarterly rhythm that works for each segment

BrightManager by Bright provides the portfolio layer that connects all different MTD IT clients into one trackable dashboard and workflow. Combined with BrightCapture and BrightBooks, the practice has a connected tool set that meets each client where they are.

Check out this blog for further information on what clients need to know about MTD IT.

How does the Bright MTD IT suite compare to alternatives for mixed-client practices?

BrightCapture by Bright is differentiated specifically for the shoebox client migration challenge. The receipt capture and auto-categorisation flow directly into BrightBooks, giving practices a single tool for the data capture step rather than a manual process for their least digitally ready clients.

Nearly 1 million people are now under MTD IT reporting obligations. BrightCapture by Bright, BrightBooks by Bright, and BrightManager by Bright give your practice with a mixed-client MTD IT base the tools to move every client to a compliant quarterly workflow without a one-size-fits-all approach.

This content may have been developed with the assistance of AI tools. Content is reviewed by a member of the Bright team before publication. Guidance on legislation can be obtained from your industry body.