Author: JW / / Latest News
It’s Coming…Time Will Fly…Start Planning Now To Make Sure Your Business Will Be Ready!
In just over 12 months from now any business that has turnover above the VAT Registration Threshold (£85,000) and is VAT registered will be obliged to keep their accounting records in digital format (ie. on some kind of accounting software) and submit their VAT returns directly from that software – the current HMRC Gateway for VAT will no longer be available to these businesses.
It does not apply to voluntarily registered businesses nor businesses that are exempt from VAT registration due to the type of their supplies.
You need to prepare for this NOW!
Don’t leave it until this time next year, particularly if you currently keep manual records (which includes spreadsheets).
You will need to choose some software appropriate to your business, and you should note that there is no free software provided by HMRC, you must choose a commercial provider (eg. Sage, Quickbooks, Xero, Kashflow, FreeAgent etc) which will usually mean additional cost.
You will need to learn how to use the software, perhaps involving some formal training and then start to input your actual accounts data.
You may struggle to do this with only a few weeks before you need to be ‘live’.
The first period that MTDfb applies to is the first VAT period commencing on or after 1 April 2019. So, it’s either April, May or June 2019 for all businesses within the regime.
We are suggesting that you seriously consider moving onto software now or from your accounting year that commences in 2018 (if not too late in the year). This will give you time to get acquainted with the system before you are required to submit returns from it.
If you already use accounting software don’t assume that all will be OK.
To be compatible with MTDfb, you’re usually going to have to be on the latest version of software.
Most software providers are moving to a subscription based model (pay per month), so that everyone is always on the latest version.
Many providers are cloud based or have cloud based options. This avoids the need for backups, can be worked on from anywhere and can be accessed by ourselves easily to prepare year end accounts. Many have ‘bank feeds’ which brings your bank transactions into the software direct from your banks back end systems (with a charge from the bank we understand).
So, don’t be complacent, contact your current software provider soon…
Will your software be compatible?
Do you need to upgrade or move onto subscription?
Do you want to move from desktop to cloud based version?
Do you need to change to a different software provider altogether?
Of course, if we keep your accounting records, we’ll make sure the software we use is compatible and we can make the relevant submissions to HMRC.
You may of course decide that you wish to outsource your records keeping and we’d be happy to provide you with a quote for this service. Any fees quoted will include a licence for the software.
However, again you would need to let us know sooner rather than later, as we may be unable to cope with a sudden influx of bookkeeping work early next year
And Then Onto Other Taxes/Everyone Else…
Whilst MTDfb is only for VAT from 2019, it will come for other taxes and smaller businesses/landlords.
At the moment, all we know is that it will not be compulsory to keep digital records and make quarterly submissions to HMRC for income tax/corporation tax until ‘at least’ 2020.
It may well be 2021 or later. It will much depend on how the VAT element from 2019 beds in.
But rest assured, it is not going away, it will come in the not too distant future.
Therefore, all businesses should consider making the move to digital record keeping in the next 12-24 months.