Are you aware of the forthcoming Making Tax Digital for VAT?
From April 2019, UK businesses above the VAT threshold will need to process their VAT returns digitally. This means they will no longer be able to keep and submit manual records. Instead, HMRC will only accept VAT Returns provided via software supporting Making Tax Digital for VAT.
A modern tax system will make it easier for businesses to comply – but it will take time adjusting to the new process.
Making Tax Digital (MTD) is vital to the new system. It will integrate digital record-keeping and enable businesses to generate and send updates directly from their software to HMRC and it starts with VAT.
Sounds great – and it really is! But, if you are a VAT registered business there are some important factors to consider like timings, software and support. Let’s take a closer look.
Tick, tock
April 2019 may seem a while away but before you know it, it will be the end-of-year rush and then the new year. Don’t push MTD to the bottom of your task list and get caught up in a last-minute panic to update your processes by 1 April.
In fact, you can make your tax digital right now. There really is no need to wait for the last possible moment.
Software set-up
You need to decide about your accounting software soon to avoid any potential complications that could arise from upgrading or migrating your software. Remember, the use of technology is compulsory. Bear in mind that it will be far easier to use online accounting software to desktop software is not typically able to submit tax online. By making tax digital for businesses, HMRC requires you to submit returns online and it will be far easier to use online accounting software.
Start assessing your online accounting software options now and make sure that the one you choose is easy to use and ticks the following boxes:
- Automatically calculates the tax you owe (including VAT and payroll tax).
- Pulls transaction data straight from your bank, your invoicing software, or your POS system.
- Updates your transactions every day, allowing you to stay on top of bank reconciliation.
- Creates digital records of paper receipts just by photographing them with your mobile phone.
Accountancy assistance
While you don’t necessarily need an accountant for MTD, it might be worth seeking assistance with the actual transition. A good accountant can make the shift to MTD easier if they are up-to-speed with HMRC’s plan as well as the implementation schedule.
How Xero can help
We consulted with HMRC on MTD so we understand the requirements and timelines inside out. Our beautiful online accounting software is built for small businesses which means we can guide you and your advisors through the transition. You or your accountant can trial our software to assess its relevance for your business needs – and our team of Small Business Specialists as well as our partner network will help you get to grips with it quickly.
Here’s something to keep in mind, we’re actually offering an early-bird business special: 25% off for the first three months – just use the code MTD25. And, as soon as you’re ready to sign up, you can transfer your data into Xero from other software providers and we’ll pay for the transfer via our partner, Movemybooks.
Embrace change
Change isn’t easy – even for the most adventurous of us. And if change involves adopting new technology, then it’s often ignored until the last minute. But fear not, MTD really isn’t as daunting as it seems. In fact, keeping digital records and filing VAT returns through software quarterly could actually reduce your workload and improve your agility. In other words, you’ll be able to spot any opportunities and threats faster – which is really good news for your business.
Save time and stress
Xero can automatically handle tasks that used to take up all of your time. From importing bank transactions to sending invoice reminders, we’ll do the work for you which will ultimately get your books done faster and give you time back for things that matter to you.
