We recently held a briefing session for some of our clients to prepare them for making tax digital. We found it helpful and we think it reassured our clients that they will be ready, but from wider conversations our network we’ve realised a number of people not only aren’t ready but don’t realise it affects them.
Almost every organisation that is VAT registered with a VAT-able turnover of over £85,000 is affected and needs to ensure that they are ready from April 2019. We expect that other businesses and organisations, and even sole traders will also need to comply by next year too, although it isn’t entirely certain yet.
So what do you need to do. Firstly you will need to ensure that firstly the software you are keeping your accountancy records in is compliant with HMRC’s requirements. This is relatively straightforward as there is a list on HMRCs website and, for example, our preferred package Xero is one of them (they are actually a New Zealand company and since New Zealand brought in making tax digital have been ready for it in the UK).
Secondly, and potentially requiring more work, you need to make sure you are keeping all your records within that software – no more invoicing using word documents or keeping receipts unscanned in shoeboxes!
This might seem like a lot of hassle so what are the benefits?
1. Avoid HMRC sanctions and potential for fines: this is pretty obvious
2. Make sure you are paying the right amount of tax: HMRC think net this will increase their tax take but for some organisations that have not been capturing all of their VAT-able costs you might find you actually save money.
3. Your records will be tidy and up to date – no more quarterly panics, and your year end will be less work
4. Most importantly, from my point of view as a finance director and management accountant, you will ensure that you have the information that you need to run your business more effectively.
Do feel free to get in touch and to use our making tax digital resources page.
We are also holding a free briefing for a limited number of people on 12th March in Reading, in partnership with Xero, but tickets are already going so book now to avoid missing out.