WELL, here we are in February already. The snowdrops have been out for a week or two in our garden and we are precariously close to seeing some daffodil buds opening. The nice thing about February (at least for accountants across the UK) is that Tax Return season is behind us now and we can begin to look forward to the next googly bowled at us all by HMRC…
This time, it’s aimed at those small businesses which are VAT registered, but have a turnover of less than £85,000 per annum. Fortunately, there are people around who can help you to bat this problem safely away to the boundary.
If you think I am labouring the metaphor a bit too much, well at least I feel that all my lost afternoons watching a certain Mr B playing village cricket as a teenager have not been wasted!
Now, pretty much everyone in business will have heard of the Government’s initiative Making Tax Digital which requires businesses to report their VAT digitally, using only compatible software to HMRC every quarter.
Until now, this has applied to larger businesses, but gradually the system has been rolled out through the ranks of small and medium sized enterprises (SME’s) until it has finally reached the smallest of those who are VAT registered. So, by April this year, 2022, every such business will be required to have registered for MTD, and will need to be reporting and paying into HMRC every quarter.
Many of these very small businesses may not even use a computer to keep their accounting records, so, for them, this will be a major change. Now the good news is, that if you have such a business and don’t know, or particularly want to know how to register for MTD digitally, you almost certainly have someone in your life already who can help. It will come as no surprise that I am talking about your accountant!
By now, I should be very surprised if any accountant wasn’t already dealing with MTD for a clutch of clients. They will have been working alongside their slightly larger clients on this for several years, and will have had the chance to iron out many a glitch.
This means that they should be able to help you meet your new obligations as painlessly as possible, without you needing to change the way you operate. Even if you want to go it alone, and take the time to do this yourself, it is worth talking to your professional before you start.
Once again, I will suggest good organisation! In this case, it means starting now. Talk to your accountant and get some early idea of how much it will cost you to use their services and compare with the cost of setting yourself up with the necessary digital registration.
I would always include costing for your time in this. So often, small business owners don’t recognise that their time is a cost to the business too. It’s also important to think about how much time you already spend on sorting out your accounts. Time, like money, doesn’t grow on trees!
Just a warning note, if VAT payments are continually late under this scheme, you could find yourself having to pay a surcharge. So, if you are in doubt, get help! It may cost you more initially, but it is likely to be well worth your while in the longer run.
So, I wish you well, and may you always be prepared for all the rules and regulations that you need to know about in business!