With just five weeks left before a major overhaul of the UK tax system with making tax digital, Northern Ireland accountancy practice, Exchange Accountants, is urging local businesses to ensure that they are prepared for the introduction of new requirements from HMRC to file taxes digitally.
Originally announced during Budget 2015, Making Tax Digital (MTD) is a new method of tax collection and administration from HMRC which, from 1 April 2019, will require businesses who have turnovers above the VAT threshold of £85,000 to file tax returns digitally every quarter.
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.
The requirement to prepare digital accounts is to be rolled out to other tax payers in the coming years, but the deadline is now looming for those businesses above the VAT threshold of £85,000. Those who fail to be ready by 1 April 2019 may be subject to penalties from HMRC.
Belfast-based Exchange Accountants has been one of the earliest adopters of digital accounting in the province, and the first accountancy firm in Northern Ireland to be recognised as a Gold Partner of popular cloud accounting software, Xero.
Accounts Director, Gary Laverty, believes that the move to digital accounting necessitated by MTD will ultimately be a positive one, saying: “Making Tax Digital is certainly one of the biggest changes to the UK tax system in a generation, and will require some preparation around training and software on the part of businesses. However, we firmly believe that the introduction of digital accounting will be a significantly positive change for most businesses going forward.”
“As the first Xero Gold Partner in Northern Ireland, we’ve been using cloud accounting to work with our client base for some time now, and have had an overwhelmingly positive response. Cloud accounting allows businesses to have a real-time view of their cash-flow whenever they need it, speeds up invoicing and helps to complete traditional chores like VAT returns in minutes rather than hours.”
“Whilst Making Tax Digital may be seen as another unneeded point of worry for some, what we’re saying is that digital accounting will actually be a big benefit to most businesses, and particularly SMEs,” said Mr. Laverty.
HMRC has stated it expects MTD to 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 1 April 2019 to start exploring their options for reporting their VAT digitally online.
“We know that from 1 April 2019, businesses over the £85,000 threshold for VAT will have to file their tax returns digitally by using some form of digital software for recording keeping, so we are calling on all those affected to start preparing for the move now before they’re left behind,” said Gary Laverty.
“Businesses and affected individuals also need to ensure that the software they are using is compliant with MTD and recognized as an ‘approved digital partner’ by HMRC, or they risk being unable to complete taxes digitally. We also want to tell those businesses who still keep records manually that the clock is ticking and they really need to be making the necessary preparations for MTD now, before time runs out.”
“If anyone affected by the new changes would like some more information, or perhaps needs some advice on making the switch to cloud accounting, then we at Exchange Accountants are more than happy to have a ‘no obligation’ chat about their requirements,” he added.
Exchange Accountants will be discussing cloud accounting and how to prepare for Making Tax Digital at an upcoming event in Belfast on Wednesday 27 February. Places are limited and those interested in learning more are encouraged to register their interest by calling 028 9040 7470 or sending an email to [email protected].
Established in 2011 with offices near Belfast City centre, Exchange Accountants provides premier accountancy services and tax advice to a wide variety of locally based SMEs and individuals.
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 recognized as a Gold Partner with market-leading cloud accountancy software provider, Xero.