Category Archives: VAT

Digital Accounting Services – preparing for Making Tax Digital

By April ’19 businesses with taxable turnover above the VAT threshold (currently £85,000) must keep digital records for VAT purposes and provide their VAT return information to HMRC using ‘functional compatible software’.  This means a ‘software program or set of compatible software programs which can connect to HMRC systems via an Application Programming Interface (API)’. This must be capable of:

  • keeping records in digital form as specified by the new rules
  • preserving digital records in digital form
  • creating a VAT return from the digital records held in compatible software and submitting this data to HMRC digitally
  • providing HMRC with VAT data on a voluntary basis
  • receiving, via the API platform, information from HMRC to ascertain compliance.

Spreadsheets & incompatible software packages are initially permitted for keeping records, but must be used in association with ‘bridging’ software that will submit the required information to HMRC in the correct digital format.

We recommend that you take the following to steps to ensure you are ready for Making Tax Digital:

  • establish if the April ’19 deadline applies to your business
  • assess whether your current accounting system is compatible for MTD

One of the easiest ways of making sure you comply with HMRC’s MTD regime is to consider keeping your business accounting records digitally on cloud accounting software.  There are several advantages to this  –

  • as your records are held online, you can access them anywhere at any time and on any device
  • you can see a clear picture of your financial position in real-time & access a wealth of financial reports
  • you can create & send digital invoices on the go, meaning your customers receive them in an instant
  • you can get daily bank feeds sent directly to your software
  • the reassurance of MTD compatible filing that matches HMRC requirements
  • you can post expenses from photos of your receipts on your phone

How we can help

  • we can provide digital software packages
  • we can offer training & advice on XERO and Kashflow software packages
  • we can offer bespoke bookkeeping & VAT services
  • we can offer VAT filing for those on spreadsheet or non-MTD compatible software.

Please contact us for more information.

We’re here to help

 

 

 

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Accounting schemes to simplify your VAT – 2. Cash Accounting Scheme

There are several alternative methods to standard VAT accounting that may be worth considering in terms of saving your business time and money.  This is the second in a series of posts in which we take a look at the basics of these schemes.

CASH ACCOUNTING SCHEME

Unlike standard VAT where you pay VAT on customer invoices issued and supplier invoices received even if they haven’t been settled, under Cash Accounting you account for VAT when your customers pay you and when you pay your suppliers.

PROS
This scheme can provide a cash flow advantage, especially if you have customers that are slow payers, plus it provides automatic bad debt relief.

CONS
If you buy most of your goods / services on credit you cannot reclaim VAT until you have paid your suppliers.  This means that if you regularly reclaim more VAT than you pay you will usually receive your repayment later than under standard VAT accounting.
If you intend to start using Cash Accounting from when you begin trading you should bear in mind that you will not be able to reclaim VAT on most start up expenditure, such as initial stock, until you have paid for those items.

Currently the Cash Accounting Scheme is available if you do not expect your VAT taxable supplies to exceed £1.35 million during the next tax year. You should be up-to-date with your VAT returns and payments and begin using the scheme at the beginning of a VAT period. You do not need to complete an application form or advise HMRC that you wish to start using the Cash Accounting Scheme, but if you are already registered for VAT you will need to be careful that you identify and separate sales and purchase transactions that you have already accounted for using standard VAT accounting. It should be noted that some limited transactions must still be accounted for using standard VAT.

If you would like further information on this scheme and whether it might be advantageous, then please do get in touch. Tel. 01242 223160, email admin@grantandco.co.uk.

Accounting schemes to simplify your VAT – 1. Annual Accounting Scheme

There are several alternative methods to standard VAT accounting that may be worth considering in terms of saving your business time and money.  We will help you explore the basics of these schemes over the next few weeks.

ANNUAL ACCOUNTING SCHEME

Unlike standard VAT where you complete four VAT Returns each year and pay / reclaim any VAT due quarterly, using the Annual Accounting Scheme you make interim payments to HMRC throughout the year and submit just one VAT Return at the end of each year.

The interim payments can be paid either by nine monthly or three quarterly instalments, each based on a percentage of the total amount of VAT you paid to HMRC in the previous year, or, if you have been VAT registered for less than 12 months, on a percentage of your total estimated VAT for the year.

Once you have submitted your VAT return at the end of your accounting year any balance of VAT due is then payable within two months of the end of that year.

You can normally use this scheme if your estimated VAT taxable turnover is not likely to be more than £1.35 million (currently) in the next 12 months.

PROS
There is only one VAT return to complete per year, reducing the administrative burden on your business.
At the end of the year you get two months to complete your annual VAT return & make any balancing payment.
Having fixed interim payments can help with cash flow management.

CONS
If you regularly reclaim VAT you will only receive one refund per year.
If you suffer a decrease in turnover your fixed interim payments might become higher then the VAT payments that would be due under standard VAT. However, an adjustment can be made if the difference is sinificant.

If you would like further information on this scheme and whether it might be advantageous, then please do get in touch. Tel. 01242 223160, email admin@grantandco.co.uk.

Are you up to date with your VAT returns?

Are you up to date with your VAT returns?

This week HMRC launched a VAT Outstanding Returns campaign, aimed at VAT registered businesses with one or more returns outstanding.  The campaign gives businesses the opportunity to file any overdue returns and pay any VAT due electronically by 28 February in return for what HMRC descibe as the ‘best terms available’ in respect of any penalties and surcharges that may be incurred.

After 28 February, businesses are being warned that if they have not submitted their outstanding VAT returns and paid what they owe HMRC will target them and place their tax affairs under greater scrutiny.

If you would like any advice or assistance in getting your VAT affairs up to date, please call us on 01242 223160.