Preparing your business for Making Tax Digital
Contributed by: Berley

man pressing a multimedia computer display

The deadline for Making Tax Digital (MTD) is fast approaching. If you are not ready for these changes, now is the time to get to grips with cloud accounting.

Will MTD affect my business?

Although the Making Tax Digital initiative aims to be completed by 2020, as of April 2019 larger businesses (those with a turnover over the VAT threshold of £85,000) will be mandated to use a digital system to meet VAT obligations only. This the first in a series of changes that aim to transform tax into an entirely digital system, updated in real-time, removing the current considerable margin for error and eventually eliminating the need for tax returns at the end of the year. Later changes will involve having all tax information on a single online account, similar to online banking. Even if the changes that are being implemented next year won’t affect you, eventually all businesses will be expected to use a digital system for their taxes. This is one of the many reasons why so many people are switching to using online accounting software like Xero.

Why Xero?

Cloud accounting has long been a staple of tech-savvy businesses and contractors. The MTD initiative will eventually require tax submissions to be submitted digitally using compatible software, so with the clock ticking there’s never been a better time to improve your business with cloud accounting. Xero is an HMRC-recognised VAT software provider, so the aims of Making Tax Digital already synergise with the features it offers. This award-winning software can also integrate external applications from various third-party vendors, all securely packaged in a straightforward user interface. When it comes to online accounting, Xero is one of the best – and Berley can help you set it up for your business.

Make your life easier with Xero

With the VAT changes being at the forefront of the MTD initiative, submissions will need to be done quarterly at the very least. Instead of publishing your return and then submitting it to HMRC, you can compile it using Xero and file it directly from the app. Your audit report will then keep track of your VAT throughout the year, covering everything from bills to bank transactions. Certain information such as the time and value of supply, VAT registration number and any VAT accounting schemes that you use must be recorded and kept for 6 years. Xero stores all of your files and transactions in one place, giving you a secure location from which to organise, edit and mail any relevant documents to whoever needs them.

Even better, Xero can be run from an app on your smartphone, giving you more freedom to choose how and where you do your tax returns.

Currently most VAT returns are already filed digitally, but for those who are still doing everything on paper, the change to full digital can feel intimidating. Combining the features of Xero with the business tax services of Berley Chartered Accountants means the transition will be easy, as we can show you how to get the most out of cloud accounting. By using Xero with your accountant, you will always stay on top of your tax obligations – and you have a specialist on hand to help you with any questions or concerns.

Don’t just take our word for it!

Every year, Xero takes away top UK industry awards, including:

  • Software product of the year 2017, British Accountancy Awards
  • Accountancy software provider of the year 2017, British Small Business Awards
  • Payroll software of the year 2017, LUCA Awards by the Institute of Certified Bookkeepers

Berley is a Silver Champion Partner to Xero and we have years of experience helping our clients get to grips with cloud accounting. Even if your business is below the VAT threshold, you will need to start moving your tax and VAT accounts to a digital system – so why not use the best?

As specialist accountants for small businesses in London, Berley has the skills to help you with Xero and the MTD initiative. To find out more about how we can make your accounting easier, call us at 020 7788 8261 or use our Quick Online Form.

For more information about Xero, you can check out:

 

Xero cloud accounting software