Now the 1st Jan has been and gone, in accordance with the new Making Tax Digital (MTD) requirements, if you’ve registered your company for VAT because your company is over the VAT threshold of a taxable turnover of over £85,000, or even if you have voluntarily registered, you now have to abide by the following MTD rules:
- You need to file your VAT returns digitally, using MTD compatible accounting software
- You need to keep your VAT records digitally, again using compatible software
If you don’t use the right software that will allow you to follow these new rules, you won’t be able to file your VAT returns. This means that you will trigger late filing penalties and additional fines for breaching the rules.
These same rules are scheduled to roll out over the next few years for your Income Tax Self-Assessment and Corporation Tax, so not only will you be following these new rules for VAT, but also other mandatory filings coming up in the near future.
I’m not registered for VAT, should I simply not register?
How you submit your VAT returns shouldn’t be the deciding factor of if you should register for VAT or not. It’s either right for your business or it’s not. If your customers are other businesses and not individuals, it’s probably best to register for VAT, even if you’re under the £85,000 limit.
You will need to consider the additional cost of around £15 – £20 a month for suitable accounting software, but whilst there is an extra cost, you will also be saving time, allowing you to focus on more important tasks at hand.
If you have any questions around MTD, VAT or accounting software, all you have to do is click here and complete the form and our accountancy partner will be in contact to discuss and answer any questions completely free of charge!
Benefits of using accounting software
Bookkeeping software typically costs upwards and around £15 a month, which equates to over £1,200 a year, but you need to make sure your software is set up correctly from the get-go. To set up your software correctly you need to:
- Connect your accounting software to your business bank account
- Make sure VAT codes are correctly allocated
- Set up bank ‘rules’ that will allow for automated posting
- Create an invoice template
- Set up automated invoice reminders to chase payments from your customers
- Tailor the ‘trading’ section of your chart of accounts
What we think
If you are or plan to register for VAT, and your time is more important than £15 – £20 a month, or you want to get a head start on upcoming MTD rules as well as all the other benefits we’ve discussed above, you should consider getting accounting software, and you’re in luck!
Our accountancy partner is more than happy to discuss and answer any questions you might have around making tax digital approved accounting software, VAT or any other accounting questions you might have!
You can even sign up to Xero accounting software for Just £15 a month + VAT (normally £26 a month + VAT) or QuickBooks for just £12.50 + VAT a month (normally £22 + VAT)!
All you have to do is click here to complete the short form and they’ll be in contact.