The shift to quarterly reporting under MTD for ITSA introduces a massive volume increase for UK firms. We examine the "alignment conundrum" whether to synchronise VAT quarters with new filing dates to avoid a perpetual cycle of reporting and staff burnout.
As the accounting profession prepares for the arrival of Making Tax Digital for Income Tax Self Assessment (MTD for ITSA), practice leaders face a significant operational dilemma; the shift to quarterly reporting introduces a massive increase in volume, forcing firms to find capacity within their existing teams. One specific tactical decision has emerged as a key ‘conundrum’ for many accountants; whether to align existing VAT quarters with the new MTD filing dates?
Stuart Miller, Director of Public Policy and Technology Research at Xero, notes that the industry is currently split on this issue. Some firms view alignment as a “non-negotiable” change required for survival, while others are hesitant to engage their clients on the topic to avoid disruption. However, failing to synchronise these deadlines creates a perpetual cycle of reporting that threatens to overwhelm staff capacity.
The operational cost of misalignment
Alex Falcon Huerta, founder of Soaring Falcon, argues that the old hesitations regarding coterminous filings belong to a pre-cloud era. Before modern technology, reconciling these different periods at year-end was indeed a “nightmare,” but today’s platforms have largely solved that data availability problem. The real risk now lies in the workflow itself. Choosing not to align filings inadvertently designs a schedule requiring submissions in one month followed by more work the next. This staggering of deadlines effectively creates “double the work” for the team and the client. By aligning the dates, a practice can reduce the total number of deadline pressure points throughout the year. This ensures that workflows like VAT and MTD happen simultaneously, reducing the pressure later on for the team.
The foundation of data quality
True efficiency requires both optimized timing and reliable data. Stuart Miller warns that while the industry is currently focused on the excitement of AI, the immediate priority for MTD success must be the “plumbing” of automation. He emphasizes that “automation is very much different to AI” and is essential for ensuring data cleanliness before deadlines arrive. If a practice aligns its VAT and MTD deadlines but fails to automate the data entry, they are merely speeding up a broken process. Miller applies the principle of “garbage in, garbage out,” noting that any real-time advisory output is only as good as the data that we put in. Therefore, the strategic move to coterminous filings must be paired with robust automation rules. This ensures that the data flowing into these simultaneous deadlines is accurate, preventing the firm from bottling-necking during the review process due to poor-quality records.
The hidden complexity of simplicity
Stuart Miller shares a revealing insight from the MTD beta testing: engineers were “heartbroken” when users pressed the submission button and simply asked, “is that it?” This reaction highlights the ultimate goal of aligning your VAT and MTD deadlines. The objective is to make the submission process feel like a non-event for the client. Aligning your quarters eliminates the chaotic client experience of submitting filings in consecutive months. Instead, it presents a unified, elegant front where the complexity of the data work is handled internally, and the client sees a seamless, singular deadline.
Short-term pain for long-term gain
Transitioning clients to new VAT quarters to match MTD cycles is not without friction. Alex acknowledges that it “might be a bit of paperwork at the beginning” to get everything aligned. Practice leaders must weigh this initial administrative burden against the long-term operational health of the firm. Alex emphasizes that taking a long-term view is essential for making the business “as lean and efficient as possible”. Triggering these changes now allows firms to streamline their internal processes before the full volume of MTD hits, turning a potential capacity crisis into a manageable, predictable routine.
