Making Tax Digital doesn’t have to be taxing according to NI accountancy firm
AS the clock ticks towards a radical overhaul of the UK tax system, Belfast-based cloud accountancy specialist Exchange Accountants is calling on Northern Ireland businesses to ‘get on the cloud’ before it’s too late.
Originally announced during Budget 2015, Making Tax Digital (MTD) is a new method of tax collection and administration from HMRC which will come into effect in April 2019 and will require businesses who have turnovers above the VAT threshold of £85,000 to file tax returns digitally every quarter.
Exchange Accountants are advising that to be ready for this new digital tax age by next Spring, VAT registered businesses should be making the necessary preparations sooner rather than later.
Every affected business and individual will have their own Digital Tax Account through which reporting of income and expenses will be required on a quarterly basis. Affected taxpayers will also need to digitally provide a finalised end of year position to HMRC as part of a year-end activity report.
Gary Laverty, Accounts Director at Exchange Accountants, the first accountancy practice in Northern Ireland to be recognised as a Gold Partner for leading cloud accountancy software provider Xero, said:
“Making Tax Digital is without doubt the most significant change to the UK tax system in a generation and will require a lot of preparation in terms of training and software but it doesn’t need to be a difficult process.”
“We know that going forward, businesses and individuals will have to obtain some form of digital software for record keeping so we are calling on all those affected to start preparing for the move now before they’re left behind,” said Mr Laverty.
Tax payers will be required to start using the new digital service from:
– April 2019 if their turnovers are more than the VAT threshold (currently £85,000)
– 2020* if they are within the scope of corporation tax and are above the VAT threshold
– 2020* if they have profits chargeable to income tax and are above the VAT threshold
– 2021* if they have profits chargeable to income tax and are below the VAT threshold
HMRC has stated that MTD will reduce the administrative burden for businesses and increase the tax payable to the exchequer by reducing the number of errors – an important step in closing an estimated £35 billion tax gap.
However, with many businesses and individuals still relying on spreadsheets and battered shoeboxes full of receipts to complete their accounts, there is now a real need for those affected from April 2019 to start exploring their options for reporting their VAT digitally online.
The move towards digital accounting is a positive one, according to Gary Laverty, an early adopter of digital accounting.
“The need to embrace digital accounting that’s been necessitated by Making Tax Digital will ultimately be a positive for most businesses,” said Gary.
“As the first Xero Gold Partner in Northern Ireland, we’ve been using the cloud to work collaboratively with a large percentage of our client base for some time now, and although these changes will surely be seen as unneeded stress for some, the reality is that cloud accounting will actually remove the need for a lot of that stress.
“Cloud accounting gives businesses a real-time view of their cashflow whenever they want it, speeds up invoicing and can help to complete traditional chores like VAT returns in minutes rather than hours – something that I think will be a big benefit to most businesses and particularly SMEs.
“If anyone has any concerns on how Making Tax Digital will impact on their business, or would like more information or advice on switching to cloud accounting, at Exchange we’re more than happy to have a ‘no obligation’ chat about their requirements,” he added.
Exchange Accountants will be hosting seminars on how to prepare for Making Tax Digital. Interested parties should register their interest by calling 028 9040 7470 or sending an email email@example.com.
Established in 2011 with offices near Belfast City centre, Exchange Accountants provides premier accountancy services and tax advice to a wide variety of companies and individuals based in Northern Ireland and the Republic of Ireland.
Over the past five years, the company has developed a specialism in digital and cloud accountancy services and was the first accountancy practice in Northern Ireland to be recognised as a Gold Partner with leading cloud accountancy software provider Xero.