Changes to VAT and Accounting Systems

The deadline for filing your digital VAT return is upon us

Most VAT registered businesses with a taxable turnover above £85,000 will need to keep digital records, sign up to compatible software and submit VAT returns using this software by 7th July 2019. The last date for returns for the returns for periods starting on or after 1 April 2019.

If you do not pay by Direct Debit, you will need to sign up at least 72 hours before your return is due.

If you pay by Direct Debit, sign up at least 7 working days before or 5 working days after your return is due. Make sure your last Direct Debit has come out of your bank account before signing up.

The background to digital VAT

The aim of digital taxation is to make it easier for individuals and businesses to get their tax right and keep on top of their affairs.

HMRC’s aim is to become one of the most digitally advanced tax administrations in the world and digital taxation is a fundamental part of that.

HMRC will have the power to ensure that businesses continue to submit digital records and they can also specify rules and regulations as to how the digital records should be kept. Additionally, it means that companies must provide their VAT return information to HMRC through Making Tax Digital (MTD) by using functional compatible software. It is worth noting that HMRC can also specify how these digital records are kept and can further detail conditions that must be complied with.

For more information on the primary legislation visit Gov.uk for a full breakdown of MTD and functional compatible software.

The secondary legislation includes changes to third-party software – as software must now be compliant and compatible with the HMRC application programming interface (API). For example, this means businesses will now have to work with SaaS software approved by HMRC and keep records in a way that are also compliant with regulations.

The secondary legislation also allows for more frequent voluntary updates to VAT records, once again executed digitally.

Read more about the changes to VAT and accounting systems.

The Benefits of Digital Accounting Systems For Your Business

Although this new regulation may seem overwhelming, it provides an opportunity to streamline business operations and improve efficiency.

Technology such as Xero and other SaaS programs can help simplify your accounts whilst ensuring you can file your tax digitally. You can access your accounts anywhere and from different devices. Accountants are also moving towards cloud-based software and moving away from locally stored documents.

Working in real-time is a huge benefit of these digital systems. Another huge benefit of SaaS is the integrations that are available. Okappy can be integrated into digital cloud-based book-keeping systems to further streamline your in-house admin services.

Digital taxation is a huge leap in terms of governmental regulation. Incorporating cloud-based software applications can also help your keep your business ahead of the game as industries continues to move towards full digitisation.