Making Tax Digital for VAT

If your accountant hasn’t mentioned this yet, then you really ought to have a new accountant. Does this affect me? Are you VAT registered? Then if so, yes. This does affect you and you need to be considering whether you will be compliant in time. What is it? Making Tax Digital for VAT requires VAT registered businesses with taxable turnover above the VAT registration threshold to keep records in digital form and file their VAT Returns using software. It is increasingly common for business records and accounts to be kept digitally, in a software program on a computer or tablet, or in a smartphone application, or maintained through such a device and stored using a cloud-based application. The difference under Making Tax Digital is that the software which businesses use must be capable of keeping and maintaining the records specified in the regulations, preparing their VAT Returns using the information maintained in those digital records and communicating with HMRC digitally via our Application Programming Interface (API) platform. If your digital records are up to date, software will be able to collate and prepare your return for you. It will then show the return to you and ask you to declare that it is correct and confirm that you want to submit it to HMRC. Once you have submitted your return you will receive confirmation through your software that it has been received. Not all software is compliant, contact us to find out if your current software will be compliant and whether you need to take any additional step. When does this start? With effect from 1 April 2019, if your taxable turnover is above the VAT registration threshold you must follow the rules set out in this notice. If your taxable turnover subsequently falls below the threshold you will need to continue to follow the Making Tax Digital rules, unless you deregister from VAT or meet other exemption criteria (see paragraph 2.2 of this notice). Only businesses with taxable turnover that has never exceeded the VAT registration threshold (currently £85,000) will be exempt from Making Tax Digital. You will therefore need to keep an eye on your taxable turnover, especially if you think it is close to the VAT registration threshold. The Making Tax Digital rules apply from your first VAT period starting on or after 1 April 2019. A ‘VAT period’ is the inclusive dates covered by your VAT Return. Here are some examples. Example 1 – Existing business with taxable turnover above the VAT registration threshold on 1 April 2019 A business submits a quarterly return covering the period 1 March to 31 May 2019. The business taxable turnover exceeds the VAT registration threshold and therefore the business will need to comply with Making Tax Digital rules for the period starting 1 June 2019. Example 2 – Business with a taxable turnover above the Making Tax Digital threshold at the point they need to register for VAT A business that is not registered for VAT is required to register from September 2019 because the taxable turnover over the previous 12 months has exceeded the VAT registration threshold. The business must follow the rules in this notice for all VAT Returns they are subsequently required to make as their taxable turnover was above the VAT threshold when they...

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HMRC – Making Tax Digital

  Below is a brief summary about the ‘Making Tax Digital’ consultations and proposals from HMRC.   HMRC’s vision is for businesses to be able to easier understand and manage their tax affairs. It wants to make greater use of the information that it already holds such as bank and building society interest to make things easier on the tax payer without them having to compile this information again. Digital record-keeping will be required from 2018 for most businesses, sole traders and landlords in order to report quarterly to HMRC. HMRC aren’t looking to become software providers, they will expect the tax payer to use third party software although they are trying to ensure free options are available. Those with income below £10,000 will not be required to use the new ‘making tax digital’ system. Further thresholds haven’t been decided yet. This is being looked at while HMRC are reviewing how they can simplify the tax system. Other areas they are looking at are the thresholds for cash vs revenue accounting and similar areas. One thing we can say for certain is that tax administration in the UK will look very different in 5 years time. At Courtley West we keep up to date on all the current developments at HMRC and we proactively engage with many of our clients using the cloud based book-keeping systems which ultimately will be very instrumental in the delivery of the quarterly reports. As always, if you have any queries about how this may affect you or you’d just like to know how we may help your business, please get in...

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Cloud Accounting – Is it time to embrace the cloud?

When I first started out in the world of accountancy most clients kept their records manually. They used large cash books and ledgers which were written up diligently by their book-keepers. Some had computerised systems, this enabled more analytical reporting to help grow their business, statements could be generated at the push of a button to send out to customers and when necessary a backup could be taken and passed to their accountant. Now most of our clients have computerised systems, they are very good and they can save the client time and improve productivity. But time waits for no one and things have moved forward again. We can bank on-line, pay our bills on-line and do the supermarket shop on-line, so why not prepare your accounts on-line? It’s important to be able to access the relevant financial information for your business in real-time or as close to it as you can get. We have smart phones, laptops, tablets, work computers and more than one person wanting to access this information at any given time. This is where the cloud comes in… The information is accessible independent of your location. You can view, edit and even send invoices from your desk, your phone or your home. The data is held remotely, therefore no longer at risk from theft or fire in your office. The data is backed up automatically on multiple servers by the service provider. You don’t need to do anything. Efficiency is improved. Multiple users can access the data from multiple locations on multiple devices. The software is always up to date, saving further time and costs. Your accountant can access the data without you having to e-mail a backup and wait for it to be returned. We’re pretty excited by the new developments in technology; the new systems can talk to your CRM or project management software giving you the ability to grow your business with minimal fuss. We’re now partnered with Xero, one of the leading service providers of cloud accounting services, so if you have any queries or want to see a demo, please get in...

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