Wylie Ruddell is encouraging Northern Ireland companies to prepare for Making Tax Digital (MTD) which becomes mandatory for all VAT-registered businesses from 1 April 2022.
The Armagh based accountancy firm has experienced an increase in enquiries regarding MTD in recent weeks, including concerns from SMEs due to make the change to digital, and is reassuring businesses that the new system is a positive step to revolutionise the tax system and will have benefits to avail of.
Making Tax Digital for VAT was first introduced by HM Revenue & Customs (HMRC) in 2019 for all businesses with an annual turnover exceeding the VAT registration threshold, which is currently £85,000 in the 2021/22 tax year. From 1 April 2022 all businesses will have to comply with MTD regulations, regardless of how large or small their turnover.
HM Revenue & Customs (HMRC) has highlighted that in a recent independent study of more than 2,000 businesses, 69% reported experiencing at least one benefit from MTD including firms preparing and submitting returns faster and increased confidence they were getting their taxes right. More than two-thirds (67%) of businesses said MTD had reduced the potential for mistakes in at least one aspect of the VAT record-keeping, preparation and returns process.
Andrew Cornett, Senior Tax Adviser of Wylie Ruddell said: “There is no doubt there are many small businesses across Northern Ireland who are used to preparing their VAT returns manually by hand and will have reacted in horror upon receiving HMRC’s recent letter detailing the new requirements. However, in the words of Corporal Jones in Dad’s Army, “Don’t Panic!” it won’t be as bad as you fear!
When MTD for VAT was first brought in back in 2019 it seemed like a lot of extra, unnecessary hassle for businesses. However, as our clients have embraced the new rules, they have found it to be a more simplified, efficient way of working. As Advisors we have also found it very beneficial when it comes to preparing year end accounts and tax compliance paperwork whilst helping our clients understand their businesses better from a day-to-day perspective.”
There are several ways to approach MTD for VAT and it will really all depend upon each scenario and what the most suitable approach is for your business. To get businesses started, Wylie Ruddell has detailed some key points to help prepare ahead of 1st April.
- Taken at its most basic level, a simple spreadsheet with specific links will automatically compile your VAT return. It is then a case of submitting the return via “bridging” software which effectively lifts the figures from your spreadsheet and submits them directly to HMRC. If you currently prepare your return in a handwritten book, you will effectively be doing the same thing only typing the detail into a proforma spreadsheet.
- For larger businesses now could be the time to move to a more complex digital accounting solution such as Xero, even if you are already registered and operating under the MTD for VAT guidelines. Digital accounting software can open up all manner of possibilities in terms of keeping your records right up to date, knowing exactly how your business is performing in a real time manner and staying on top of your cashflow.
If you need assistance with the new Making Tax Digital for VAT rules or to discuss your accounting or taxation needs, you can contact Wylie Ruddell Chartered Accountants on 028 3752 3227 or go to www.wylieruddell.com