It’s all steam ahead with Making Tax Digital (MTD) for VAT and it is coming into effect from April 2019. Thereafter, businesses with a turnover above the VAT threshold, currently £85,000, will have to comply with MTD. Followed by phase 2, in 2020 when every VAT registered business (including voluntarily registered) will become part of the scheme.
One quarter of VAT registered businesses are still relying on paper and excel spreadsheets. Are you still one of them?
If you are running a business on paper read on to find out why you should switch to digital as soon as possible.
What is MTD for VAT?
If you are VAT registered you will be legally obliged to keep all VAT records digitally. Furthermore, you are required to submit VAT return information electronically using HMRC approved software instead of via the HMRC VAT portal. (Voluntarily registered businesses can keep using the portal until 2020).
Why is MTD happening?
HMRC has 3 objectives:
1 To be the most digitally advanced tax administrator in the world
2 Reduce mistakes
3 End tax avoidance
How can a business go digital?
It will be compulsory to use approved record keeping software that talks digitally with HMRC and you will need to take these 3 steps to move forward
- Speak to a tax expert
- Use recognised bookkeeping software
- Change business processes for collecting, storing and exchanging data
HMRC approved products
There’s a range of bookkeeping software on the market to choose. You can research which is best for your business. Personally I would recommend Kashflow as our clients find it easy to use and it makes our job easier too but do your own research to find the best fit for your business.
- SAGE Online
Some businesses have their own bookkeeping software in place. Remember the onus is on the business to be compatible with HMRC systems. You should seriously weigh up pros and cons of investing in future software upgrades.
Why let change in compliance force us to change?
At Murrison and Wilson we are strong advocates of going digital. It’s a strategic investment that will save you money and time not just a compulsory change that you add to your to do list.
There are a number of obvious benefits of replacing spreadsheets with bookkeeping software over and above compatibility with new legislation.
What are the obvious benefits?
- Predict VAT bills
- Assist in investment
- Assist in cash flow planning
- Real data for strategic forecasting
- Avoid financial penalties
- Less paperwork
- Spend more time on the business rather than in the business.
How we can help you
We invested in digital software ourselves and have the necessary expertise to switch a business from paper to digital without interrupting the flow of your business.
If you’re one of the 25% of businesses still relying on manual records there’s no better time to change.
Making Tax Digital is starting with VAT but soon HMRC will expect every financial transaction to be stored and submitted to HMRC digitally.
How Murrison & Wilson can help?
Murrison & Wilson are the business and tax experts you can trust to transition your records smoothly to MTD compatible software.
The sooner you get started the smoother it will be.
Get in touch today to find out about our Making Tax Digital package, including transition plans. So why wait?