How to make Self Assessment less stressful for your practice

The Self Assessment tax return season, running up to the deadline of 31 January, is one of the busiest and most stressful times for accountants.

And with HMRC announcing that tax returns for the 2019/20 tax year can be submitted as late as midnight on 28 February 2021 without incurring a penalty, the season will extend into February.

There are many things you can do to make this period less hectic and run more smoothly and efficiently for your accountancy practice and for yourself.

Encouraging clients to start early with their tax returns and keeping good records using accounting software will make your life easier. You can also use practice management software to keep on top of workflows and automate other processes.

This will help you minimise time on manual tasks, such as inputting data from receipts, and spend more time on value-added services to clients.

And it will make you feel much less stressed over the festive period and into January.

Self Assessment stress to deal with

Small enterprises make up over 99% of the 5.7 million businesses in the UK, according to the Office for Tax Simplification. In three quarters of these, the owner is the only employee.

This means that for them, dealing with tax can be a burden compared with the daily pressure of running a business.

Time spent on record keeping is also time they are not earning, so some collect and send records to their accountants as late as possible, and occasionally in a disorderly manner.

This puts tremendous pressure on your practice's tax teams to chase records, tidy them and file everything on time for your clients.

Caroline Miskin, manager, Tax Practitioner Support, at the Institute of Chartered Accountants in England and Wales (ICAEW), says that, in addition to clients' tardiness, it is often a stressful period for accountants due to the sheer volume of work involved.

However, some firms have nailed the process by embedding systems that ensure all returns are in by Christmas, she says.

Get your clients to start early

The first step towards achieving this is to prepare far in advance, says Miskin. Review your processes immediately after one Self Assessment season finishes, then start planning for the next.

Analyse what went well, what did not, and how you can adjust your processes for requesting and chasing information from clients.

Most firms now use commercial tax assessment filing software. But good practice management software is also essential.

"We're starting to see more software that automates information requests, via secure data exchanges, and chases late information," says Miskin. "It will tell you the status of each job at any time."

Set clear expectations and ground rules for clients and stick to them.

Sometimes, accountants' instinct is to be hugely accommodating with tardy clients, as they pay the bills, says Miskin. But the firms that find it less stressful have educated clients to send information early and have stood by their rules.

Joanne Harris, technical commercial manager at accounting services provider Optionis Group, says encouraging clients to start gathering their tax return information early gives you the leeway to check, double check, and find and rectify mistakes before the 31 January deadline.

Online accounting software goes a long way towards organising, storing and collating information needed to submit annual returns, adds Harris. But she also recommends using practice management or workflow software to set reminders for follow-ups, such as tackling client requests.

The result is that, instead of losing time on activities such as receipt collation, qualified accountants can offer more valuable expertise and services, such as tax planning, to clients.

Encourage your clients to use accounting software

Alison Parsons, Sage development manager at accountancy firm Albert Goodman, says her firm is reaping the benefits of a concerted drive to show clients the benefits of using cloud accounting software and bank feeds.

With bank feeds connected, the software can produce, in its simplest form, a cash book that is kept up to date and largely auto-populated by pre-set rules, she says. This saves up to 80% of record-keeping time for the business owner.

"It also means we can now approach these businesses soon after the end of the tax year and provide an early tax estimate, which reduces stress greatly for staff and is great for the client too," says Parsons.

"Internally, everyone shares the role of monitoring progress on client deadlines, with partners, managers and tax team members updated regularly on tax returns that have been completed and those still to come in."

Everyone is also keen to move this forward at a much earlier stage than in past years, so the bulk of tax return work is well underway at an advanced stage, she says. This allows the team more time to focus on clients who might need more help completing their records.

"By making the most of bank feeds, rules, invoice capture and auto-entry, we have reduced time spent preparing basic records for our clients, allowing staff more time to analyse and review resulting figures," says Parsons.

"All this means we can reduce time-pressure on staff and offer greater value to the client, for example, presenting key performance indicators (KPIs) and tailored management packs as part of the service. These give greater insight into how their business is performing and an early sign of developing trends.

"It's important for our clients to receive the best possible value from our service. Like many professions, accountancy is a competitive market. Firms that do not make the most of technology risk losing clients to those that offer more value."

Move to automation

Chris Smith, personal tax director at accountancy firm BKL, says the growing use of Robotic Process Automation (RPA) for personal tax returns is an especially exciting area for forward-thinking tax teams. It can provide greater control and access, for example, around submissions to HMRC.

"For tax advisers, RPA drastically reduces average time spent on a file, and time on repetitive tasks that are not expanding our tax knowledge," he says.

"The result is a more efficient, less stressful January. It's therefore worth talking to your firm's IT team about RPA if you haven't already."

Smith says it is vital to know what challenges lie ahead in the Self Assessment tax return season.

"Accountants can become set in their ways," he warns. "They may use old software and have little interest in updating. Perhaps they are scared to retrain with new tools.

"But tax software is becoming smarter. Most will have workflow, automation tools and links to HMRC, so you should use these things fully.

"You can also use these records for comparison next year, which will make future seasons less stressful too.

"If you are not open to change, the busy season will remain as hectic as ever - more so than it needs to be - and [service levels can suffer]."

As HMRC roll Making Tax Digital (MTD) out beyond VAT to Income Tax and Corporation Tax, automation will move from optional to mandatory in many cases. By automating early, practices can understand what works best for them and leverage the technology to reduce the peak workload during tax return season.

Being organised in this way will help to avoid last-minute panics, which create more risk of mistakes, missed planning opportunities, or not delivering good client care, he says.

Catherine Livingstone, director at accountancy firm Wylie & Bisset, encourages her business clients to automate as much as possible.

"There is now software our clients can use to make bookkeeping a much quicker and more efficient process. Cloud accounting software has many tools that can make things easier to manage - for example, you can link to your bank directly so transactions are downloaded into your software.

"Using automation also reduces errors and speeds up processes. Plus, the software will provide up-to-date and accurate information meaning we can better advise our clients throughout the year - not just at the year end - and they can make better decisions.

"The software can also help businesses operate as they can use it on the go, anywhere, to capture cash expenses or check whether a customer has paid them."

Managing resources

Jo Nockels, financial controller and senior commercial manager at accounting network TaxAssist Accountants, says it is vital to manage your resources carefully during the tax return season and practice management software can help you do this.

"It will give you a clear understanding of all the jobs you need to complete by 31 January and how long they will take," she says. "If you have staffing issues, you can then forecast how long the jobs will take and plan to have the resources, for example, through staff overtime, or outsourcing to local bookkeepers."

Receipt-processing software is another useful application, says Nockels. She adds: "Either via upload, snap, scanning or emailing, this can capture the information on receipts and sales invoices, of varying sizes, in record time.

"Plugging this data straight into cloud bookkeeping products is powerful and can give clients access to real-time insight into their business."

Document exchange portals are also great tools, she points out. "The postal service can be slow and unreliable, so we are starting to implement portals to securely exchange documents with clients," says Nockels. "It is safe and it provides an audit trail of document transmission and approval."

Automate communication

Masum Ahmed, tax partner at McBrides Chartered Accountants, says communication is key to making the period to the end of January less stressful, and more profitable and useful for clients.

"Our marketing team do a great job communicating about this, in differing forms, including via social media campaigns," he says. "Every six weeks, starting in May, we send a reminder to clients to file their information.

"Collaborating with colleagues in all departments, including marketing and corporate finance, is essential. Colleagues are well versed in communicating the benefits of filing early and the opportunities for tax planning.

"For example, if we know the tax liability early in the year, we can help the client change their liability by making gift aid payments, pension contributions and transferring assets between spouses.

"We underline that the earlier a client completes their tax return, the more time they have to budget and manage their cash flow.

"Also, if they have overpaid HMRC, it is in their interest to complete their tax return early. HMRC is less busy in July, so it will likely receive their refund quicker.

"We often remind clients that it's better to have this in July than December - rather than being an early Christmas present, it could be money for a summer holiday. Sharing these benefits makes a difference to the workflow."

McBrides also encourages clients to gather their tax return information throughout the year so they can access it quickly, and the firm communicates how easy it is now to use technology and embrace the cloud.

"Over the past few years, we have encouraged clients to embrace software to make things smoother for all," says Ahmed. "There are benefits to the client being more on top of their data and not having to rush to find errant receipts at the last minute."

Conclusion on making Self Assessment less stressful

The sheer volume of work and the tendency for clients to send information late means that many accountancy firms still find the period up to 31 January hectic and stressful.

But some are now ahead of the curve, thanks to better processes and embracing improvements in accounting and practice management software.

Starting early is key as is reviewing your processes in a regular and timely fashion. Communication with clients is also essential and has been made easier by technological improvements.

If you embrace these changes, the Self Assessment period should no longer be a burden. With finely tuned processes and technology, you might even finish it with stress levels lower than ever before.

Editor's note: This article was first published in November 2019 and has been updated for relevance.