Tag: MTD

Tax Building Blocks

Making Tax Digital – Are You Ready?

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Making Tax Digital – Are You Ready?

July 2019 marks the period that you have to submit your VAT returns using HMRC’s new Making Tax Digital (MTD) regime. Already Accountants, VAT registered businesses and HMRC are struggling to cope.

Take a look at Accounting Web’s report on how HMRC’s systems were already struggling in May – Read report here

If you have not addressed MTD you need to do this NOW!

Your accountant should have been in touch to make sure your systems allows you to send HMRC compatible VAT returns. You may have been offered a bridging software to read from Excel (or other non-compliant accounting products) to then transfer to HMRC. In our opinion this is a sticky plaster over an open wound and not a long term solution. You have probably been given this type of software because your accountant does not understand or is overstretched.

Our recommendation is that you use Xero or SageOne to manage your businesses finances. Both pieces of software are fully compatible with MTD. 1 Accounts are Making Tax Digital certified and can help you transfer your business over to software that will not only be compliant but save you heaps of time to.

You should make sure your accountant can help you through the process of transitioning you to online software, registering you for MTD and maintaining your VAT returns. HMRC have some guidance on their website we recommend reading – Read article here.

If your VAT return (period ending 30th June 2019) is not filed by the 7th of August 2019 you may get a fine from HMRC. It is unknown to us if HMRC’s systems will be able to cope with this months filings. Our advice would be don’t leave it till the last minute.

 

What is MTD?

What Is Making Tax Digital?

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What is MTD?

Fact: 

All of our clients are Making Tax Digital (MTD) compliant because they use the latest online accounting software provided by the market leaders – Sage and Xero.

What is Making Tax Digital (MTD)?

Making Tax Digital (MTD) is a government initiative which aims to transform the administration of tax to create a simpler, more effective and efficient tax regime that makes it easier for taxpayers to get their tax right.  (Let’s not forget to mention the estimated additional revenue of £610 million for HMRC as a result of the reduction in tax errors!)

Businesses that meet the criteria will be required to file their tax online, make online payments and keep digital records.

Quite simply, Making Tax Digital (MTD) is all about managing your accounts online.

Who is affected?

On 1st April 2019, all UK businesses that are VAT registered and operating above the £85,000 VAT threshold will be required to keep their records digitally and to submit VAT returns to HMRC using MTD compliant software.

Other areas of MTD, such as income tax and corporation tax, have been put on hold until 2020, at the earliest.

What do I need to do now?

If you are not VAT registered then you do not need to do anything at the moment. Just keep an eye on your turnover and if you think you are nearing the threshold give us a call on 01440 844 986. You should also be mindful of announcements from HMRC as to when income tax and corporation tax will be covered by MTD.

If you are already using MTD compliant accounting software then you do not need to take any further action.

If you are not using an MTD compliant accounting software, such as Xero or Sage Business Cloud, and you are above the £85,000 VAT threshold it’s time to call 1 Accounts!

Ditch the dinosaurs…

Many “traditional” accountants are panicking because they have not embraced the digital revolution. They have chosen to continue with desktop based systems, time sheets and outdated processes.  With the deadline for MTD looming they are now in danger of extinction!

This is the advice from the ICAEW (Institute of Chartered Accountants in England and Wales) for their members:-

Preparing your practice for MTD

Agents will need to take steps to prepare both their own practices and their clients for the disruption that Making Tax Digital and digitalisation will cause to the market for accounting and tax services.

 

Pick the pioneers…

1 Accounts was established in 2013 with the sole focus of moving businesses from the traditional accountancy model to online accounting with all its time and money saving benefits. The team at 1 Accounts are experts in cloud accounting, they did their learning on the “digitalisation of accounting services” years ago and have the accolades to prove it –  Sage UK’s Top Online Accountants, 2020 Innovation Awards 2016 most ‘Innovative Practice’ and a Xero Gold Champion Partner with a Making Tax Digital Ready classification.

The dinosaurs will be charging their clients for the privilege of learning about the “new ways” and converting clients from desk based systems to online systems. Just think – if they are operating time sheets, every hour has to be accounted for! Do you want to pay for them to catch up?