Making Tax Digital deadline fast approaching, is your farm business ready?
From 1 April 2019, VAT registered businesses with a turnover exceeding the £85,000 VAT threshold will be required to file VAT returns through Making Tax Digital compliant software and not via the current HMRC portal.
This move will require businesses or their advisers to use Making Tax Digital compliant software. Some farms do still work from cash books and spreadsheets or may be using older versions of accounting software, so if this is you, you will need to act now.
Research we carried out with 530 businesses in the second half of 2018 suggests that just 65% of businesses understand and are prepared for these changes, with just over half (53%) of the businesses surveyed using Making Tax Digital compliant software. A worrying 27% of businesses did not think their finance teams were ready for the Making Tax Digital deadline, and 19% had not heard of Making Tax Digital at all, leaving themselves at risk.
The online filing of VAT returns is the first step in a much larger digitisation programme of the way the Government collects personal and corporate tax.
HMRC have produced a list of suppliers who are working with them towards compliance and this can be found here. Amongst the names on this list are Farmplan and Landmark who along with large software providers in the market such as QuickBooks, Xero and Sage are producing compliant packages.
Making Tax Digital – the key points:
- If your turnover exceeds the VAT threshold of £85,000 you will no longer be able to file your VAT returns via the HMRC portal. They will need to be filed via Making Tax Digital compliant software.
- If you are currently using software from a provider who is working towards compliance, ensure you are using an up to date version as most older versions will not be compliant.
- The information needed to fill in your VAT returns is not changing.
- The frequency of your VAT returns will not be changing.
- Do not leave these conversations until April, whilst we anticipate some tolerance from HMRC initially, there will be penalties for non-compliance in the future.
If you haven’t yet considered the benefits of moving your accounts and bookkeeping to an online system, we would be happy to provide further information to you. Having real-time data available is helping many rural businesses to manage debtors, make purchasing decisions with real-time information and to run their business in a smarter and more organised way.
The transition from manual records can be daunting, although the required changes can give rise to the opportunity for wider business management improvements.
HMRC have also provided information on instances where ‘bridging software’ can be used. This will require the information to be kept electronically in the first instance as the transfer of data to the bridging software must be digital. Bridging software will take your information and report it to HMRC in the prescribed format.
Making Tax Digital is a great opportunity for you to look at your accounting function and evaluate your current processes. Our experts can help you decide on the online accounting solution that is the best fit for you, and your agricultural business needs.
We are dedicated to providing user-friendly, time-efficient products to our clients and if you have any doubts on your current solutions, regarding cost or usability, we will be able to help find the best option.
For further information please contact us here
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