Making Tax Digital (MTD) is a UK government initiative set to come into force from April 2019 - revolutionising the way that business owners collect and report their tax information. Specifically, digital records will be mandatory, submissions to HMRC will be quarterly, and tax returns will be filed electronically.
Coming into effect this month and impacting all VAT-registered businesses with a turnover above £85,000 per annum – Gillian Grant, Business Advisory Manager and certified Xero Advisor at M.B. McGrady & Co Chartered Accountants, explains how going digital will help retailers become more efficient when dealing with tax returns and record keeping.
“Tax can be a challenge for retailers, but the UK Government is seeking to change that. Its new programme, Making Tax Digital, aims to create an efficient digital system. If you haven’t yet considered the benefits of moving your accounts and book-keeping to an online system, now is the time to act. Having real time data available ‘on the move’ is helping many retail businesses to manage debtors, make purchasing decisions with real time information and to run their business in a smarter and more organised way,” comments Gillian Grant.
To provide some clarity and help retail businesses understand how these changes will affect business, M.B. McGrady & Co. clients, Bernie Blaney and Nuala Perry, owners of Rita’s Occasion Wear Specialists, embraced online accounting from the outset in when they began trading in 2017 and use Xero to manage their entire accounts remit, including quotations, invoicing, and VAT. Explaining how using online accounting software has been of great help to their business, Bernie comments:
“We have been using a cloud-based, book-keeping package since 2017, but only recently have we fully embraced the change and committed 100% to online accounting.
“Just this month, we heard about the forthcoming HMRC changes and the urgent need to be completely online before April 2019. Thankfully we’re ahead of the game and are starting to reap the benefits of online accounting.
“Yes, setting up the package takes time, and that’s where our accountants played an important role, and they still do! Our client advisor checks in on our Xero account as we approach quarter end, and leaves comments if there are any values or areas of data missing etc. This is very effective, leaving us with more time to do what I enjoy … operate and grow the business.
“Once the hard work has been done, it’s a matter of keeping up to date with invoices. Xero actually saves us a considerable amount of time as all of the data that we require is at our finger-tips – we now have ‘real time’ insight into our business and its performance, which is invaluable.”
Speaking about the advantages of cloud accounting to the business, Nuala adds: “Undoubtedly ease-of-access and having ‘real time’ data are the prime advantages of cloud accounting. The ability to take care of your bookkeeping on the go means that we don’t have to be in the office to check into our accounts, we can access and work on our financial data anywhere and at any time.
“In terms of costs, there’s an outlay at the start and an investment in time, however having a quarterly fixed cost is a real benefit.”
Gillian Grant explains further: “Rita’s Occasion Wear Specialists accounts now operate on ‘real time’ meaning that Bernie and Nuala have up-to-date and current financial information, which is a major benefit to clients.
“Our online accounting clients have also mentioned that when making large purchases or agreeing to major outlay, being able to access their accounts and have an immediate overview of the financial picture, gives a huge level of reassurance rather than simply relying on gut-feeling.”
When it comes to online accounting, Gillian adds: “Xero and other online accounting packages are as simple or complex as clients want them to be. There’s lots of ‘add on’ services that are right for some businesses but not others. Scanning invoices direct to Xero is a fantastic timing-saving extra and providing direct payment options is speeding up cash flow for a number of our clients.”
Bernie agrees and adds: “Where cloud accounting offers real value is through the access to real time data by multiple users on multiple devices. Although I handle the majority of our accounts, others in our team have access to our Xero system.”
With a specialist Making Tax Digital (MTD) division, M.B. McGrady & Co Chartered Accountants is ideally placed to provide expert support and advice to businesses and their employees. To help businesses prepare and understand the changes ahead, Gillian Grant answers some of the most common questions being asked by retail clients about MTD.
What do retail businesses need to do for Making Tax Digital?
Businesses, with a taxable turnover exceeding the VAT threshold must ensure that they’re MTD-VAT compliant by 1 April 2019. Specifically, you will need to:
- Use MTD-enabled software
- Keep financial records digitally
- Submit VAT returns via MTD
How can retail businesses prepare for Making Tax Digital?
While MTD isn’t complicated once you get your head around it, finding the time to get your head around what you need to do can be challenging. Top tips for retail business owners preparing for Making Tax Digital are:
- Act now: Start putting plans in place now and get to know your new systems before you have to.
- Do it all: While the requirement for digital records currently only applies to VAT-relevant data, running two processes will be hard work and arduous. Take the leap and go fully digital to save time, money and stress.
- Trial multichannel management software: Speaking of saving time, money and stress, multichannel management software is great for retailers with an ecommerce option. It offers a simple solution to digitally link your online marketplaces and shopping cart data to your accounting software. Add to that bulk listings, order management, live inventory management, reporting and shipping carrier integration, and you won’t know what to do with all of your new time.
- Get help if you need to: If the topic of tax really is taxing, get the help by speaking with experts – at M.B. McGrady & Co. Chartered Accountants we have a specialist MTD team and are happy to provide advice or guidance.
Want to know more?
There is a temptation to keep putting Making Tax Digital to the back of our minds, but change is coming, and businesses really need to make the next few months count, to ensure that their software, systems and people are all ready for the change.
With offices in Belfast, Downpatrick and Newtownards, M.B. McGrady & Co Chartered Accountants represents a diverse range of clients including SMEs, family run businesses, retail business, agri businesses, charities and sole traders across Northern Ireland. To find out more about Making Tax Digital and how it might affect your retail business visit www.mbmcgrady.co.uk
For more information please contact Gillian Grant, Business Advisory Manager and certified Xero Advisor at Gillian.Grant@mbmcgrady.co.uk or on 028 9031 6950