I HOPE this reminder won’t come as a horrible shock to anyone with a small business, but the change to Making Tax Digital is approaching at a rate of knots. Consequently, in a few months all sole traders, partnerships and limited companies who are operating above the VAT threshold, will have to change the way they make their quarterly reports to the tax man.
This will potentially be one of the biggest recording changes in a long while, and it could be (avoiding all No Saxon) a little bit of a nuisance.
VAT-registered businesses with a taxable turnover above the VAT threshold will be required to use the Making Tax Digital service to keep records digitally and use compatible software to submit their VAT returns from April 1st.
According to the government “Making Tax Digital is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs”.
This statement brings back memories of school days, when every teacher seemed to be convinced that theirs was the only important subject in the curriculum and so homework was loaded on by all of them.
Despite this mild attack of irritation, I should be clear that many professionals are more than ready for the challenge, so worry not, dear friends. Now is not the time, however, to be shy around your accountant.
It would be a good idea to be prepared by ensuring that if you are a small business and do not have a finance department of your own, you know that your accountant can deal with Making Tax Digital on your behalf or at the very least smooth your pathway.
You may, for instance, already be using software which has been developed to assist you in the preparation of accounts in the correct format. There are a few types of software which have been prepared specifically with this changeover in mind. If you aren’t sure which is best for you, ask your financial professional which they recommend and why.
It is possible that in some cases they will be able to offer you or someone in your company training in how to use it most effectively. I know we have a small group that I call “The Young People” who have grasped this nettle with apparent ease and, having been accredited as trainers, have now trained the majority of our relevant clients or accepted the fact that some would prefer us simply to file the returns on their behalf.
Anyway, the moral of this story, I believe, is don’t put off the inevitable, because where HMRC is concerned, this can lead to nasty little fines and awkward investigations. Simply go to those who are there to help you or do some thorough research on your own behalf.
Oh, and if you’re feeling smug because you are not VAT registered, don’t get too comfortable — Making Tax Digital will be coining to you next!
Ah well, in the words of dear Corporal Jones “Don’t Panic!” Help is at hand, and together, we’ll get it sorted_ Happy 2019 to one and all.