Making Tax Digital as at 20.11.18
Foisted upon the business (including self-employed and landlords) way back in the March 2015 Budget, we are being frequently reminded that as from 1 April 2019 (a mere 5 months away), all Value Added Tax Registered businesses will HAVE to file their Returns online and DIGITALLY. This task was passed on by the government and Her Majesty’s Revenue & Customs, who then sat back and wanted the commercial software houses to implement this massive changeover. Comparing this with the government’s introduction of Universal Credit, which has still been beset by teething problems, it is easy to see that the pressure is on the wealth producing sector rather than the government. There have been many software houses who have peppered the accountancy profession with their solutions and seminars, etc. As a conscientious accountancy practice whose duty it is to serve its clients, we have attended a huge number of these. Sadly, the issue of free ABC Accounts Books to our clients will after 1 April 2019 be of no use in keeping that business within the law. It is only digital records that will satisfy a businesses’ legal obligations. Who can provide this? Well after attending so many presentations, confusion can still reign. To simplify matters, we have looked at MyFirmsApp, FreeAgent, Xero, Sage, QuickBooks Online, and have yet to be fully convinced. Other practitioners that we met at these events also have had mixed opinions. All of these have been valued, and enabled us to reject those that do not come up to the SIMPLE way of recording a business’ transactions. Therefore we can reduce the choice down to, perhaps the first two – although we are not a closed shop to the others from coming up with a developed package that will satisfy our practice’s clients mode of recording. The beauty of the Digital Age is that nearly everyone has a “smart” phone, and can scan or photograph a bill and send it down-the-line. MyFirmsApp claims that this is the way to go. FreeAgent will allow a self-employed business person to issue invoices, and take payments from a bank statement and put the data in the right areas for tax obligations to be complied with (called “scraping” the bank statement). We are assured that a cash business can fully use this, but our experience as to how clients record these with a simple daily total, etc, needs to be imported into the software. Like Brexit, this might be the best compromise at the time of writing. If Financial Accounts can also be gleaned easily – as has been the situation with the free ABC Accounts Books, then clients will be half-way to complying, The downside is that all clients will have to do their own book-keeping digitally. There is nothing wrong with that, as it is the same as “taking responsibility” for running their own business, with a minimal time factor needed to record the transactions digitally instead of manually. That would mean that the times that an outsider who writes up books and records is not needed to ask the question: “what was the type of item that you paid x for?” We never expect clients to become book-keepers, rather than the traders that have the business expertise, and should have their time left to develop their businesses. BUT it’s a government dictate, and we all have to comply – sooner or later – or be fined.
For those who are not VAT registered, they will be forced to adopt digital book-keeping from 1 April 2020.
If you wish to discuss costs, and what to do next, please contact us. Our practice has serviced virtually all its clients own self-assessment tax returns (thank you) over the past few months,. Their tax liabilities for July (2018), and the next true one due on January 31 are known. We are unlike other practitioners who are up-to-their-necks every January, when YOU as our valued clients, have kept your side of our requests, and allowed us the freedom to explore these opportunities on your behalf.