Making Tax Digital for VAT: IT Is The Way Forward
And it'll make things easier for you ...
POSTED BY ROGER EDDOWES ON 01/10/2018 @ 8:00AM
Let's face it, that mad rush at the end of a financial year to make sure everything is 'in order' is rather stressful and quite unpleasant. With VAT it's actually every quarter, so that's even worse ...
Making Tax Digital for VAT is coming and IT will make it easier for everyone!
photo by rawpixel on unsplash
Bearing in mind that VAT applies to our own business at Essendon and we have to do what you do, we can say with all sincerity that HMRC's decision to require businesses to submit specific information digitally every three months from early next year is actually a blessing.
"What does this mean and who
will be affected?"
In a nutshell, as of April 2019, a new regime will start for businesses with a turnover above the VAT threshold, for they will be required to keep and submit digital records for VAT purposes.
So, if you're used to piles of paper and handwritten entries in a ledger then we're sorry, but things are changing. However, don't despair. With the right attitude, making tax digital for VAT is going to see everyone smiling, to be honest. HMRC, business owners, accountants, and bookkeepers ... we'll all be grinning.
"And here's why ... it will reduce the amount of paperwork!"
The combination of fit-for-purpose software and the resulting automated processes of matching transactions to entries will significantly reduce the amount of paper flying around. It also has the added benefit of reducing errors and thus reducing the risk of a big bill building up.
First things first, don't panic. If IT isn't your thing, your accountant or bookkeeper will undoubtedly be able to do it for you, quickly and easily. So, once you've got comfortable with that idea, or have already reached the point where you are rubbing your hands together itching to start, we'd say get going on it right away.
Then, it'll help if you next:
Establish when it will actually be compulsory for your business as the government has set out a timeline
Investigate what online accounting software can help you in your quest. Good accounting packages like Xero, Quickbooks, and Sage already have this functionality incorporated as standard so they could help you get going. Use them!
Discuss your options with your accountant. This is going to make everyone's life much easier, and your accountant will be the best person to advise on just how you can maximise the benefits for your business.
There's no doubt that making tax digital is going to require you getting your head around a bit of new technology. But you can get help from your accountant to make the transition, even if you intend to then manage it in-house on an ongoing basis.
Once you've got it operating in your business, you will find yourself more informed and more able to make strategic decisions as a result of the information you glean on a quarterly basis.
You'll see patterns forming that open up opportunities and help you tackle threats. You'll have more contact with your accountant, and that's never a bad thing. And it's very possible you'll actually reduce the amount of tax you pay overall as you may find you can claim more legitimate expenses than you have been to date.
"So, now that we've put it that way ... what do you reckon?"
We'd say give us a ring on 01908 774320 or click here to ping me an email and let's work out just how making tax digital for VAT really does make IT the way forward for your business.
Until next time ...
More about Roger Eddowes ...
Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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