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, from April 2019 businesses with a turnover over the VAT threshold of £85,000 will be mandated to use a digital system to meet VAT obligations. This means they will have to keep their records digitally and provide the VAT return information to HMRC via a compatible software. 

The VAT return is the first in a series of changes that aim to transform tax into an entirely digital system, updated in real-time, removing a 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 VAT obligations 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 now.

Why Xero?

Cloud accounting has long been a staple of tech-savvy businesses and contractors. The MTD initiative will eventually require all businesses to submit their taxes 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, with our team of Xero-certified advisors, we can help you set it up for your business. You can read about Xero on this page ‘Get the most out of Xero with Berley‘. 

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. Instead of publishing your return and then submitting it to HMRC, you can compile it using Xero and file it directly from the software. 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 on the cloud, meaning you can access the information whenever you need them. 

One of the biggest advantages of Xero is it is built for small business owners – you don’t have to possess a certain amount of accounting knowledge to use it, and you also don’t have to install the software and run updates. If you would like to know more about Xero, contact our team of Xero-certified advisors

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