With Self Assessment Tax Returns all filed on time, the next challenge is Making Tax Digital for VAT. Some people think it should be delayed as we are also trying to deal with VAT implications of a no deal Brexit but that appears unlikely.
As a Trust and Estate Practitioner I have had an Agent Services Account for over 12 months as I had to register Trusts online, so I was already on my way to complying with MTD.
Although I am happy to work with any accounting package I have teamed up with Quickbooks for in-house book-keeping and so my software package like many others is MTD ready. It is worth mentioning here that there is also bridging software available for those who prefer a spreadsheet book-keeping system.
The final stage is to list my clients for MTD and the timing of that is crucial as it has to be after the filing of the VAT return on the old system and before the filing of the VAT return on the new system. If you pay VAT by direct debit you cannot be signed up within 15 working days before a submission deadline or 5 working days after a submission deadline. A short window of opportunity for monthly filers so hopefully HMRC will sort that out a little better before we all go live on the system.
Are you within the scope of MTD for VAT?
If your business is VAT registered AND your turnover is above £85,000 – Yes you are (there are a few exceptions).
When does it start?
The first VAT periods commencing after 1 April 2019. So the first VAT quarter will be quarter ended June 2019 which means digital records need to be kept from 1 April 2019.
Although businesses are required to record each individual transaction digitally they are not required to store invoices/receipts digitally.
Although the idea is that everything should be digitally linked without manual intervention there are some relaxations and hopefully a couple more to come. The relaxations so far are:-
- Retailers can record gross daily takings and there is no requirement to have a digital link between the till and accounting system.
- Summary information received from third party agents such as letting agents can be used to create third party record.
- Supplies received can be combined on an expense claim before creating a digital record.
Should we embrace this?
Well everyone will have their own view on that. As your business grows, software becomes more and more important because automation frees up valuable time and helps you to have more up to date information at your finger tips. With all the phone apps and scanning technology available, the right software can really add value to your business if used well. The MTD journey is bound to have bumps along the way and cause some frustration but we cannot halt progress, so we may as well smile and use it to our advantage.
Whilst many VAT registered businesses are focussing on MTD there are other VAT registered businesses also wondering how the Brexit will affect their VAT reporting. If you trade with the EU you will have no doubt received letters from HMRC about getting ready in case of a no deal Brexit. March is next month and although we do not yet know where Brexit will take us it is important to keep abreast of the advice as it is happening. Here is a link to HMRC website which may be useful.
If you would like any help with your book-keeping and VAT returns please get in touch with us.