What is Making Tax Digital?
From 1st April all VAT registered businesses with a turnover over £85,000 will have to keep digital records and submit VAT returns using compatible software.
HMRC want to bring tax into the digital age, bringing together their internal systems with taxpayers using digital methods to provide information. The project has been somewhat sidelined in part by Brexit but MTD for VAT is definitely starting on 1st April 2019.
What is changing?
Initially, the only change is the portal that you file your VAT return through. You can no longer key your numbers into the online vat return, the information has to come directly from accounting software and your records must be digital.
Other than that, nothing is changing. Same information provided to HMRC, same filing dates, same payment dates.
Is it going to cost me money?
The answer to this question will likely be yes. The more complex or larger your business, the higher this cost may be. However the costs are reasonable, controllable and there are enough benefits to you for this to be an investment rather than a cost.
What are the benefits of cloud accounting to me?
Time saving – there are initial outlays of time to be anticipated, but once your system is set up, your time spent bookkeeping should be significantly reduced.
Costs – Although you may have some initial set-up costs, online software is generally cheaper than the desktop alternatives.
Accessibility – You can access your financial data online wherever you are.
Security – Keeping your data in the cloud is much safer than using paper or storing your information on one computer.
Results – Accounting software shows you how your business is performing in real-time.
Do I have to use Cloud software?
Technically, no. HMRC will have a ‘soft landing’ for the initial period and you can use bridging software to link your spreadsheets to the VAT portal. Some desktop softwares such as Sage have linked to cloud portals to enable you to continue to use their system so you just need to make sure you are on the latest version.
I’ve heard its ok to still use spreadsheets?
It is true that you can use spreadsheets together with bridging software and file your VAT returns. However, we believe that these alternative workarounds are just temporary sticking plasters. We’ve migrated hundreds of clients to Xero and its working well for them, be it easier, faster or cheaper, there is something for everyone to like about the move.
There is so much for you to gain from ditching your spreadsheets and because we have so many clients already in the cloud, we have plenty of time and resources to help you move over too. If we still had most of our clients on spreadsheets we would probably be telling you to use bridging software, because we simply wouldn’t have time to move everybody across.
How can Stubbs Parkin help me?
Take a look at our onboarding page which outlines the process we have developed for migration to the Ideal System. Your client manager can demo the system for you and talk you through how to make it work for your business. Our prices are dependent on the work involved and we can talk you through the prices online or in person so you can decide how much you want to pay for your new bookkeeping system.
If you are not a Stubbs Parkin client, we would love to talk to you about how best to move to the cloud and we can also provide training and support for your move to MTD without you needing to move away from your current Accountant.