By 2019, it has been said by Her Majesty’s Revenue & Customs (HMRC) that their proposal to make tax digital will be introduced. Under this new system, anybody can track their professional and commercial tax account transactions automatically online. Submission of these accounts will occur quarterly to HMRC, so as to approximate the amount of taxes due.
This online scheme is envisioned to be a transparent way of operating, whilst eliminating some of the ineffectiveness that can often impede paper tax filings.
However, this isn’t the same practise as lodging an online return. In fact, UK taxpayers have been completing online returns for years. Making tax digital has three essential differences:
- Bank dealings and other financial data will flow spontaneously into an individual’s digital tax account, regardless whether they declare that income or expenses.
- People will need to submit at least once per quarter.
- Once submitted, they must be filed using certain software.
At what stage are we in the process?
It’s true that “Making Tax Digital” has been on the cards for quite some time. However, the most recent government finance bill has recommended a two-part implementation:
As of April 2019, companies with a turnover over the VAT threshold, must maintain digital records for VAT purposes.
The, from 2020, companies might be requested to keep digital records and bring up to date HMRC quarterly for additional taxes.
How will this affect clients?
They will have to utilise a certain type of software in which to save their VAT records, plus for filing VAT returns. This could be through Sage Online, Quick Book Online, Xero, free agent etc.
For other kinds of tax, companies will probably be expected to have their accounts submitted each quarter, so they’d have to utilise the services of your firm more frequently. Some clients might see this as a problem. In truth, regular interactions should be a lot more effective since there won’t be large build-ups of work to complete.
More recurrent submissions will also assist clients to side-step any potential shocks. Large tax bills can accrue over the passage of a year, but when tax is worked out on a quarterly basis, it is likely that things will remain more focused and less out of hand. This incoming system will also produce more chances for advisors to assist with planning tax.
When clients select their accounting software, they should first be sure that it has online competencies. This is because desktop accounting software isn’t usually able to complete tax online submissions.
As a further addition, online accounting software will also allow both yourself and your client to:
- Gain entry to the business accounts from any place with Wi-Fi
- Generate ‘bank feeds’, whereby transaction data runs direct into the ledger
- Work together online by making and getting messages inside the software
How will it affect us as Accountants and/or Bookkeepers?
There will clearly be a big role to play for Accountants and bookkeepers during the changeover period for “Making Tax Digital”. We’ll have to instruct our business clients, most of whom may not be aware of the timescales involved.
We will also be in touch with our tax clients more regularly. That may alter how we provide and charge for our services.
Your clients might also depend on you for technological guidance. If they aren’t used to working with such software, or their desktop software isn’t able to file tax online, they’ll need to know what to do. You’ll be needed to vouch for certain software to use and your help will likely be needed when setting this up.
Why is bookkeeping needed for a business?
Each business has a legal responsibility to retain accounts of their transactions. There is no set presentation that must be followed, but a minimum must be for all sales, outlays and purchases to be recorded.
Should a corporation fail to preserve satisfactory records, then they may face a fine of up to £3,000 by HMRC. Furthermore, they could get an extra tax bill if the insufficient records bring about an improper tax return being filed.
Apart from the requirements, keeping decent records is an important part of successively running any business. When correct records are preserved, the company owner will be aware – at any time – what customers owe, amounts owed to suppliers, the profits of his or her business and how much available cash there is. This equates to healthier judgements and progression of cash flow and productivity can be organised more freely.
Why’s it a good idea to outsource your bookkeeping?
Outsourcing your bookkeeping to professionals such as Daniel Consultancy not only removes one of the biggest difficulties involved with running a company’s financial dealings, but also provides a whole host of advantages, such as:
- The most suitable bookkeeping system around
We will appraise the type of your business, conditions, and necessities and then choose the finest bookkeeping software bundle to suit you. For most of our customers, we use a range of modern software, such as Xero, QuickBooks online, Sage online, Pandle, Kashflow and Free Agent. At Daniel Consultancy, we can bring together these cloud based programs to small and medium size enterprises.
- Bringing peace of mind
As a comprehensive accountancy practice, our diligent bookkeepers have numerous years of relevant experience to guarantee swift and precise data entry. This results in an accurate and thorough set of accounts and tax returns, at the conclusion of the financial period.
This carries extra significance, should HMRC choose your company for analysis, as there are far fewer chances for inconsistencies being discovered – should the records you provide be correct. For your further peace of mind, we will even provide a non-disclosure agreement and service agreement.
- Secure, professional service
Do you have a GDPR complaint you wish to seek advice or follow up on? We can provide this service to our accountancy practices in the UK as well. Our expert team are leaders in this very new and sometimes confusing area of data protection.
Your documents are always safe and secure with us. They will be saved in drop box, receipt bank or auto entry, so have faith in our team from day one.
- Affordable prices
Here at Daniel Consultancy, we believe in transparency and affordability. Our fee structure is £15 to £20 per hour, subject to the software and intricacy of the work, which we think you’ll agree is a fair rate. Terms and conditions applicable.
How does the process work?
We go to great lengths to provide a process that is as straightforward as can be for our clients. We will even assist you remotely, or at your premises in person.
You can send us paper records by utilising our pre-paid mailbags, which are provided to you free upon request. All you have to do is bring the mailbag to any Post Office, and this will be delivered to us before 1PM the next day, fully insured and trackable via Special Delivery.
For things such as electronic records (for example, invoices sent as PDFs) you just have to forward them on to your allotted admin assistant through email or drop box or G-drive.
Once we have received your records, we will enter those transactions into the relevant cloud-based bookkeeping software which you’ll be able to access at any time. We’ll then use the completed bookkeeping to finish your VAT returns, should they be applicable, accounts and tax returns also.