Making Tax Digital (MTD) is fast approaching us, you might have seen some of our social media posts, if not, you would of certainly seen others.
We are going to give you a couple facts about Making Tax Digital and the possible affects this will have on your business.
Fact 1 – Roll-out of the scheme
The scheme is being rolled out in 3 stages starting on 1st April 2019 – the people who will be part of this section of the roll out will be VAT Registered businesses whose turnover exceeds the threshold of £85,000
The second roll-out will be 1st April 2020 – this is for businesses who are VAT Registered voluntarily
N.B: Please be mindful the only tax which is part of MTD under these roll-outs is VAT, other taxes will not be affected at these 2 date points.
We understand there is going to be a third roll-out in April 2021 which will include all businesses and individuals having to report their taxes quarterly, this will also include the other taxes from the businesses who are part of the first 2 roll-outs.
The third roll-out is dependent on the first 2 being successful as MTD has been delayed a number of times due to infrastructure
Fact 2 – Reporting to HMRC under MTD
Reporting to HMRC has evolved many times since the announcement of the digitisation of the tax system
Currently you can keep paper records and file your VAT return via HMRCs website, with MTD this will all change you will need to keep electronic records and submit them through commercial software or via bridging software if your records are in Excel.
There are plenty of options of commercial software to keep your records and file the request return through. To give you an idea we are partners with the following:
Quickbooks Online – http://www.quickbooks.co.uk
Xero – http://www.xero.com
Sage Line 50 http://www.sage.co.uk
Sage Business Cloud – http://www.sage.co.uk/sagebusinesscloud
Freeagent – You are able to get this for free if you are a Natwest or RBS customer – http://www.freeagent.com
Kashflow – http://www.kashflow.com
The reason behind this is due to the availability of these solutions to the end user, we want to make a new client transferring to us from another accountant as painless as possible so not to impact your business allowing you to continue building your business.
If you keep your records in Excel there are certain rules you have to follow to enable you to keep the records in this format, you have to have a API link to allow submission to HMRC or you have to use bridging software. The big drawback we see from using this solution is generally you will need to get the records into the bridging software providers format which can take an enormement time and effort when you come to submitting your solution.
There is a lot of integrations available to make your life easier when using the commercial software from payment processors to automation of entering invoices
HOW DOES THIS AFFECT MY BUSINESS
MTD will affect all businesses eventually, but that does not stop you from being prepared and alter your processes now rather than waiting until the last minute.
Your reporting to HMRC will become more structured, but this will also help your business to become more structured and not have filing errors
Using software or Excel can help you to understand where your business is heading much quicker than the old fashioned methods
You will be eventually paying taxes more regularly but these should be in smaller amounts, which allows it to be more manageable
You can actually save time by converting to commercial software with the integrations available thus allowing you to spend more time on your business and get those lovely weekends back
CAN MY ACCOUNTANT HELP ME
Short Answer: YES WITHOUT A DOUBT.
Have you asked them about any solutions and have had no reply – or are unsure on how they can help you save time.
We have seen the role of the accountant changing over the years from someone who did the compliance work and gave a little advice, to giving more advice and ideas to the client while still doing the compliance work in the background.
Here at Lesstax2pay, we see there are lots of options to businesses to help with their processes and managing their finances through new software and integrations.
Your accountant should be able to help you save time from inputting invoices and expenses as well as providing general advice and compliance work.
We believe not all accountants are the same – so if the answer to the 2 questions above are yes, no need to panic get in touch and we can show you how to make your business more efficient especially in a world where time is so critical.