Money Matters Column

MONEY MATTERS

SMALLER VAT-REGISTERED BUSINESSES URGED TO PREPARE FOR ‘MAKING TAXDIGITAL’

Small VAT registered businesses have until April to prepare for a shake-up in the way they submit VAT returns, says Justin Wright of Lovewell Blake. When Making Tax Digital (MTD) for VAT was introduced in 2019, it was compulsory for most businesses trading above the VAT threshold of £85,000 to keep records in digital format and submit their VAT returns using compatible software. Smaller businesses which were VAT registered but with turnovers below the threshold were not forced to adopt MTD – but that exemption is about to come to an end, and from April next year most VAT registered businesses will be covered by it. That means that those who are still using the ‘old’ method of filing returns logging into HM and manuall t ing the figures into o es are going to have to change the way they do things. Whilst it is understandable that businesses could be nervous and perhaps even daunted by the prospect of moving from manual records or spreadsheets to software the e erience of those firms which have already made the switch suggests that you shouldn’t regard MTD as a threat – but as an opportunity to improve the way you operate. aking our record kee ing online isn t ust a out how ou su mit returns to HM but it’s about how you keep your underlying records, and how that data can help you run your usiness etter here are man enefits to cloud accounting: having up-to-date information at their fingerti s can transform the wa entre reneurs plan and monitor the progress of their business. That information will be more accurate, more timely and more accessible than it could ever be with traditional record- keeping methods. The best way to comply with the new MTD regulations and to en o the fullest enefits of making the switch, is via a subscription to a proprietary cloud accounting software. This approach will mean that you will always have the most up-to-date version of the software, and that it will e fit for ur ose should HM introduce more new regulation in the future. More importantly, it will ensure you have the best tools to run your business – as well as saving your valuable time in inputting data. Don’t forget that this technology also allows your business advisers to give better quality advice, because it will also be based on the most accurate, up-todate information.

It may be that MTD is the piece of red tape which forces many businesses to make the move to cloud accounting; I’m pretty confident that the ast ma orit will look ack in a year’s time and be very glad they made the move. That is certainly the experience amongst those who have already taken the plunge. Justin Wright is a business services manager ased at Lo ewell lake s hetford office

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