Making Tax Digital (MTD) is the most fundamental change to the administration of the tax system for a generation. When implemented, most businesses will be required to maintain their accounting records digitally – improving efficiency, effectiveness and ease of compliance.
Coming into effect from April 2019 and impacting all VAT-registered businesses with a turnover above £85,000 per annum – M.B. McGrady & Co Chartered Accountants is preparing its clients for the change and has already started to implement Making Tax Digital procedures for many businesses to ensure all business owners are ready to go ‘online.’
To provide some clarity and help businesses understand how these changes will affect business, we spoke to a local business owner who has already adopted Xero for online accounting.
M.B. McGrady & Co. client, Ed Lindsay, Director of Magna Moon Ltd (pictured) – the parent company of Blue Moon, Magnakata and Finnebrogue Woods – explains how using online accounting software has been of great help to his business.
Ed, working alongside Conaill McGrady, Partner at M.B. McGrady & Co Chartered Accountants, made the switch to online accounting in 2015 and now uses Xero to manage his entire accounts remit, including payroll, quotations, invoicing, and VAT.
Ed comments: “I had been using a cloud-based, book-keeping package for several years, but only recently have I fully embraced the change and committed 100% to online accounting.
“Just this month, I heard about the forthcoming HMRC changes and the urgent need to be completely online before April 2019. Thankfully we’re ahead of the game and are starting to reap the benefits of online accounting.
“Yes, setting up the package takes time, and that’s where our accountants played an important role, and they still do! Our client advisor checks in on our Xero account as we approach quarter end, and leaves comments if there are any values or areas of data missing etc. This is very effective, leaving me with more time to do what I enjoy … operate and grow the business.
“Once the hard work has been done, it’s a matter of keeping up to date with invoices. Xero actually saves me a considerable amount of time as all of the data that I require is at my finger-tips – we now have ‘real time’ insight into our business and its performance, which is invaluable.”
Speaking about the advantages of cloud accounting to the business, Ed adds: “Undoubtedly ease-of-access, having ‘real time’ data and more efficient book-keeping are the prime advantages of cloud accounting. The ability to take care of your bookkeeping ‘on the go’ means that I don’t have to be in the office to check into my accounts, I can access and work on our financial data in one place, at any time and payroll is also simple to use.
“In terms of costs, there’s an outlay at the start and an investment in time, however having a quarterly fixed cost is a real benefit for budgeting purposes.”
Conaill McGrady, Partner at M.B. McGrady & Co explains further: “Magna Moon’s accounts now operate on ‘real time’ meaning that Ed has up-to-date and current financial information – this is a major benefit to clients, especially those who aren’t traditionally office-based. Having instant access to real-time data allows for accurate, up-to-date financial information, leading to better cash-flow management and tax planning, and helps to make better business decisions.
“Our online accounting clients have also mentioned that when making large purchases or agreeing to major outlay, being able to access their accounts and have an immediate overview of the financial picture, gives a huge level of reassurance rather than simply relying on gut-feeling.”
When it comes to the Making Tax Digital deadline approaching, Conaill adds: “Updating HMRC with business and financial information will be faster and much easier – meaning more time to focus on and grow your business. Switching over to a cloud-based accounts platform shouldn’t be seen as a burden. It’s an opportunity to get better control of your business.
“Xero and other online accounting packages are as simple or complex as clients want them to be. There’s lots of ‘add on’ services that are right for some businesses but not others. Scanning invoices direct to Xero is a fantastic timing-saving extra and providing direct payment options is speeding up cash flow for a number of our clients.”
Ed agrees and adds: “Where cloud accounting offers real value is through the access to real time data by multiple users on multiple devices. Although I handle the majority of our accounts, some of our team have access to our Xero system. We trained members of our team to invoice customers at point of sale, rather than relying on a central administration team, and there’s no doubt that this speeds up our payments and processes.”
Making Tax Digital (MTD) comes into effect in April 2019 with legislation requiring businesses above the VAT threshold to set up a digital tax account and file quarterly returns online. Making Tax Digital is part of the Government’s plan to make accounts easier for businesses by ensuring that records are up-to-date.
- B. McGrady & Co. Chartered Accountants is urging businesses to make the change now and prepare their company for the changes ahead. In doing so, they will also experience the major benefits that can be gained from online accounting. There’s a number of options when it comes to online accounting packages and Conaill McGrady is advising businesses to speak with their accountants to see which package is best suited to their needs.
Leading Chartered Accountants – M. B. McGrady & Co – is one of the largest and most-respected independent practices in Northern Ireland. Recently awarded Xero silver partner status, M.B. McGrady & Co Chartered Accountants have offices in Belfast, Downpatrick and Newtownards and represent a diverse range of clients including SMEs, family run businesses, agri businesses, charities and sole traders across Northern Ireland.
To find out more about Making Tax Digital and how it might affect your business get in touch. Tel: 028 9031 6950 or visit www.mbmcgrady.co.uk