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Making Tax Digital for VAT:
an update
The issue of VAT is currently at the fore of the government’s
Making Tax Digital (MTD) initiative. Here we provide an
overview of the latest position.
What’s changed?
MTD was previously set to be implemented between 2018 and 2020.
However, in response to concerns raised by experts over the pace and
scale of the changes, the government has now deferred the introduction
of MTD for Business (MTDfB) by a year.
From 1 April 2019 only businesses with turnover above the VAT threshold
(currently £85,000) will have to keep digital records for VAT purposes
and provide their VAT return information to HMRC using MTD functional
compatible software.
The government has confirmed that keeping digital records and making
quarterly updates will not be made mandatory for taxes other than VAT
before April 2020. Those businesses below the VAT threshold which
have voluntarily registered for VAT can opt to join MTDfB. HMRC will
be piloting MTD for VAT for the rest of 2017, with wider live piloting
beginning in Spring 2018.
MTD for VAT: an overview
Following the publication of the Finance Bill in September 2017, which
includes primary legislation allowing the introduction of MTD for VAT
and income tax, HMRC published an open consultation on the draft VAT
regulations. The law will retain the current rules regarding keeping and
preserving records, the keeping of accounts and the making of returns,
but it provides new powers to allow HMRC to introduce regulations
governing the digital submission of information from VAT-registered
businesses.
Keeping digital records
Under the proposed rules, businesses will be required to submit summary
totals of their digital records to HMRC at least every three months. In
addition, with their first quarterly update they must provide certain
‘designatory data’, and any subsequent changes to this data must be
included in their next quarterly update. The regulations will specify the
information a business needs to preserve digitally.
Businesses will also need to maintain digital records for the VAT account
(the audit trail between primary accounting records and the VAT return).
This will include details of the output and input VAT.
The VAT account will need to detail any adjustments made which will
include correcting errors in calculating VAT payable in a previous period,
and other adjustments such as claiming bad debt relief and annual
adjustments for partial exemption and retail schemes. Only the total
for each type of adjustment will be required to be kept digitally and
not details of the calculations underlying them. Businesses will need to
preserve digital records using functional compatible software for up to
six years.
VAT returns
For businesses within the scope of MTD for VAT, information will be
pulled from the digital records to populate the VAT return. There will be a
minimum of nine boxes required to complete the return, although HMRC
will permit businesses to include supplementary VAT information as part
of a VAT return or voluntary update.
The government has confirmed that the submission deadlines for income
tax and VAT will not be aligned, meaning there will be no changes to the
statutory VAT return or payment dates.
As your accountants, we will keep abreast of the latest
announcements relating to MTD. For more information,
please contact us.
Social media do’s and don’ts
Social media can be a useful tool for marketing
your services and building a client network.
However, the flip side is that it can be all too
easy to create negative social media situations.
Here are some of our top tips to ensure you get
the most out of social media.
1. Stay active
Businesses should ensure that social media accounts are
kept active: an active social media account will increase
the chances of people seeing and following your posts.
You may wish to incorporate this responsibility into an
employee’s job role.
Replying to tweets that you have been mentioned in is
also crucial – this will help to show that you are engaged
with your followers.
2. Remain cool and collected
Never respond negatively to a client – especially on
social media, where potentially millions of people can see
it! Negative responses may very well deter prospective
customers. Remaining professional at all times will
demonstrate that your business always endeavours to
provide clients with the best possible service. If a dispute
is likely to require a lot of attention, it may be best to
contact the customer directly.
3. Keep your target audience in mind
Make sure that the content you are posting is accurate
and of interest to your followers. Updating followers on
company promotions or industry news is good practice,
but it could have a negative effect if the things you are
posting about are misleading. If your business relies on
visuals, consider the best social media platforms to use
– Instagram is a better alternative to Twitter for posting
images of products, for example.
4. Don’t spam your followers
Posts covering the same topic are likely to annoy
followers, potentially resulting in a drop in your follower
count. Posting too often can also cause people to become
overwhelmed with information.
It’s useful to keep a social media schedule to ensure your
updates are posted at optimum times, resulting in minimal
irritation to your followers.
5. Keep your private account private
Be wary of linking your personal social media accounts to
your professional accounts – many people have fallen foul
to posting content intended for a personal account on
their business account!
6. Have fun!
Although maintaining a professional stance is important,
keeping your social media accounts and posts creative may
prove to be a winning strategy for your firm.
Social media is constantly evolving. Being
aware of the key do’s and don’ts will help to
ensure that your social media strategy works
for your firm.