MTD for Income Tax has quadrupled your client contact, but not your team.

A quarterly update is not difficult to prepare, and any competent bookkeeper can do one. What has changed is how often the work comes round, and frequency is what breaks a practice's resourcing model.

Counting the cycles

Take an affected client under the old model. Once a year, you chased records, brought the bookkeeping up to date, prepared the return, raised queries, got approval and filed. Call it one full cycle of contact, chasing, processing and communication.

Under Making Tax Digital for Income Tax, that same client now generates four quarterly updates plus an end-of-period statement and a final declaration. The quarterly obligations were added on top of the annual return. Each quarterly cycle has its own records chase, catch-up bookkeeping, reconciliation, submission and client communication.

Each cycle takes less processing time than a full annual job, but the number of touchpoints is roughly four times higher. Touchpoints use up a practice's capacity faster than processing minutes do, because each one needs a person to make contact, wait, follow up and escalate.

What has multiplied is the chasing, and chasing is the easiest part of the cycle to move elsewhere and the hardest to automate away.

The scope keeps widening

April 2026 brought in taxpayers with qualifying income above £50,000, around 780,000 of them on HMRC's published figures. From April 2027 the threshold falls to £30,000. From April 2028 it falls to £20,000.

Each step down brings in a larger population than the one before, because taxpayer numbers rise as you descend the income scale. The clients arriving in 2027 and 2028 will also, on average, have worse records and less software familiarity than the 2026 cohort, because the earlier cohort skewed towards more established businesses already working with an accountant.

Volume rises, and so does the effort per client. A resourcing plan built around the 2026 cohort will not survive 2027 unchanged.

Why hiring is the expensive answer

The instinctive response is to recruit. Three things are working against that.

• The pipeline has narrowed. UK practices have reported severe difficulty resourcing new client work, with a large majority saying talent shortages have constrained their capacity to take on engagements. You are competing for a smaller pool against firms with deeper pockets.
• Employment costs rose. Employer National Insurance moved to 15% with the secondary threshold cut to £5,000. Every hire costs more than the equivalent hire did two years ago, before you reach pension, software, holiday cover and recruitment fees.
• The demand is uneven. Quarterly deadlines cluster. Hiring for the peak leaves you over-staffed between peaks; hiring for the average leaves you in crisis four times a year rather than once.

What works

The practices handling this well are doing three fairly ordinary things.

1. Separating the chase from the accounting

You do not need a qualified accountant to chase records. You need persistence, a defined escalation ladder and someone whose week is not already full. Separating that function from the technical work, whether internally or externally, usually recovers more capacity than any other single change, because it takes the highest-volume, lowest-skill activity away from your most expensive people.

2. Segmenting clients by readiness rather than by fee

The clients who take disproportionate effort are rarely the largest. They are the ones with paper records, no software and a habit of arriving in the last week. Identify them in advance and decide whether to move them onto software, reprice them or decline them, and make that decision before the quarter starts, not halfway through it.

3. Making capacity variable

MTD demand comes in peaks, while employment cost is continuous. Anything that turns part of your capacity from a fixed monthly salary into a cost that scales with cycles deals with that mismatch directly. That may be outsourcing, or it may be a well-run bank of contract staff. Absorbing four times the cycles into a team sized for one does not work.

Where outsourcing will not help

If your MTD clients are still on fees set when the obligation was annual, your problem is pricing, and outsourcing will not fix it. Moving the work elsewhere just moves the loss with it.

Reprice first, then resource. Done the other way round, you find the pricing problem after you have already committed to the cost.