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Are you ready to go fully digital with your VAT?

 


As a small business owner, you are probably aware that all Vat Returns have been digital, i.e. online, for quite some time. However, you may be unaware that HMRC’s objectives do not end there. In less than a year, you’ll have a completely different set of needs to meet.


 


The first phase of the new Make Tax Digital system will be implemented in April 2019. So begin planning now for the adjustments that will occur next tax year.


 


The Consequences of Making Tax Digital


 


To make all of your entries real-time, the authorities plan to make it more or less essential for you to buy or lease what they call functional compatible software, such as Clearbooks. (Mac users: double-check that your chosen solution will function in the United Kingdom.)


 


This may mean no more leafing through paper records every quarter or year, but it does mean that you (or whoever handles your accounting) must keep track of and record all types of spending as they occur, as well as invoicing.


Spreadsheets can still be utilized if you attach them electronically to HMRC, according to reports from small business organisations, but this is only a temporary solution that could be troublesome in practice.


 


VAT is the first to be applied.


 


From April 2019, the first phase of what is expected to be a complete company tax transition by 2021 is that VAT data will be produced digitally and continually reportable.


 


Currently, the VAT Returns only show total sales and purchases. After April 1, 2019, you must digitally record each and every item, including the VAT element (zero-rate, standard-rate, etc.). All modifications, such as reverse charges on imports, automobile leases, sustenance, and entertainment, must be documented.


 


There are benefits and drawbacks to consider:


Advantages:


 


Avoiding VAT registration errors and associated fines by reducing physical paperwork and collating/converting spreadsheet data


Disadvantages:


Cloud accounting software is an additional cost (for current non-users)


Quarterly or annual work is replaced by continuous recording.


Extra hours likely invoiced by your accountant for conversion and compliance.


Who is impacted?


Organizations with yearly sales of £85,000 or more are required to register for VAT; those with sales below that amount may choose to register if they believe they will exceed the amount in the current year or shortly.


 


This includes partnerships, single traders, public organizations, schools, and charities, in addition to limited firms.


 


 


 


http://EzineArticles.com/9995309 is the source of this article.

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