Acquired new or current purchasers seeking to change their processes in order that they adhere to Making Tax Digital for VAT?

With all VAT registered companies having to observe Making Tax Digital (MTD) for VAT guidelines, the variety of purchasers it’s essential assist on this space will enhance (if it hasn’t already).

That will help you assist your purchasers with MTD, we’ve created this text.

It covers the advantages of digital working and the right way to educate your purchasers on how they should submit their VAT Returns, and many extra too.

Right here’s what we cowl:

Which clients does Making Tax Digital for VAT apply to?

How to encourage clients to move to digital ways of working

7 tips to get clients with Making Tax Digital for VAT

Final thoughts on Making Tax Digital for VAT

All VAT-registered companies should observe the Making Tax Digital for VAT guidelines.

Since 2019, MTD for VAT utilized to companies with a taxable turnover that was over the VAT threshold (at present £85,000).

The remit for MTD for VAT expanded in April 2022. Now, the principles additionally apply to companies below the brink which can be registered for VAT (until they’re exempt)..

One of many key causes for Making Tax Digital current is to encourage companies to undertake digital methods of working.

To withstand this isn’t solely to danger breaking the regulation however it additionally places the enterprise at a aggressive drawback.

When making an attempt to adjust to MTD’s guidelines, companies that cling to outdated methods of working and rely largely on paper should put in additional effort than those who don’t.

However you may assist your purchasers by speaking this to them, whereas emphasising the advantages.

Utilizing HMRC-recognised accounting software program means enterprise admin duties will be diminished from days to only hours.

It means companies at all times know their money movement place, to allow them to make good choices (and spot any issues earlier than they change into uncontrolled).

And making a VAT Return if the accounting information is already inside the software program is only a matter of clicking just a few choices, then maybe making use of changes, and clicking to submit the return.

It’s this optimistic and provoking message that may typically be buried beneath what appears to companies to be yet one more necessary requirement from the federal government.

And it’s not simply purchasers that profit.

Making Tax Digital implies that you, as an accountant, are in a greater place to help your purchasers and supply a fair higher service to them.

Begin your purchasers on the journey as we speak by serving to them use software program that’s MTD-ready and that may assist all future MTD compliance necessities.

In April 2024, many sole merchants should use MTD for their income tax. Whereas from April 2026 on the earliest, integrated companies should use MTD for his or her corporation tax returns.

Listed here are seven methods you may assist and assist your purchasers with Making Tax Digital for VAT.

HMRC is counting on accountants to teach in regards to the specifics of MTD for VAT.

Because you intimately perceive the conditions of your purchasers, this is smart.

So how will you do that?

Right here’s three simple and easy options:

  1. Tack on data to the tip of current conversations. Use each shopper touchpoint as an excuse to teach, and guarantee all members of your workers have the data to take action. Some practices have even added MTD messaging to their e mail signatures to make sure it’s at all times included in communications. Updating your web site and social media accounts is a smart transfer.
  2. E mail blasts can hold your purchasers updated. The truth is, treating this identical to a advertising and marketing marketing campaign can pay dividends as a result of you ought to be promoting new or totally different service choices that match with MTD’s necessities and what your purchasers want. Deal with this as a possibility to promote elevated consciousness of what you supply.
  3. Webinars might help you attain plenty of folks. For those who run the webinar as a Q&A session, the preliminary prep requirement is diminished too. Frightened about being stumped by a troublesome query? Let folks know you might have to reply with a solution after the webinar. And video conferencing instruments equivalent to Zoom and Microsoft Groups are basically free, simple to make use of, and broadly adopted.

This would possibly catch out purchasers who ask you to handle their VAT Returns for them.

They may assume they will merely neglect about Making Tax Digital for VAT, and keep on as they at all times have.

However they’ve nonetheless bought to maintain VAT accounting information digitally, and know in regards to the digital linking guidelines (no copy/slicing and pasting of key VAT information from one vacation spot to a different).

This would possibly seem to be an schooling problem. But it surely’s greater than that.

Chances are you’ll want to assist your purchasers undertake a digital resolution that’s proper for his or her wants.

At its most simple, this may very well be only a spreadsheet – though the MTD for VAT guidelines imply it wants to incorporate extra particulars than simply enter and output VAT quantities (for instance, invoice-level particulars equivalent to tax level dates, VAT charges, and so forth).

But when the shopper makes use of accounting software program that connects to your techniques, which in flip makes producing VAT Returns a lot simpler, it’s a win-win scenario for each you and them.

When purchasers first hear that Making Tax Digital goes to have an effect on them, you may count on 4 W questions in fast succession: Why, when, who, and what.

The ‘when’ query is prone to be probably the most urgent that purchasers will ask of you as a result of they’ll be afraid of getting penalised.

You may reply it very simply by offering deadlines for the shopper to fulfill. This consists of registration deadlines, begin days, and first submitting dates, as follows:

When do purchasers join MTD for VAT?

Purchasers shouldn’t join lower than:

  • Seven days earlier than their return is due; or
  • 5 days after their return is due.

When do purchasers begin utilizing MTD for VAT?

For purchasers who file quarterly VAT Returns, these are examples of what begin dates appear to be:

  • 1 April 2022: If the earlier VAT quarter ended 31 March 2022.
  • 1 Could 2022: If the earlier VAT quarter ended 30 April 2022.
  • 1 June 2022: If the earlier VAT quarter ended 31 Could 2022.

When do purchasers first file VAT Returns utilizing MTD for VAT?

Once more assuming quarterly returns, these are examples of when preliminary VAT Returns for MTD for VAT should be filed:

  • 7 August 2022 for a VAT quarter starting 1 April 2022.
  • 7 September 2022 for a VAT quarter starting 1 Could 2022.
  • 7 October 2022 for a VAT quarter starting 1 June 2022.

Earlier than purchasers can register for Making Tax Digital for VAT, they should know which MTD-recognised accounting software they’re going to make use of. HMRC gained’t allow them to proceed until that is recognized.

The software program can take totally different types, relying on the shopper’s wants, and you ought to be ready to assist with options.

Some might select to make use of bridging software with their current spreadsheets.

Others might use their current software program however add in an MTD for VAT submissions module.

Then there are those that discover their software program is already MTD-recognised and so they merely must register for MTD, after which authenticate inside the software program.

Be certain that your purchasers realise that. Simply because the software program is MTD-recognised, it doesn’t imply they’re.

Serving to purchasers with software program is likely one of the fast messages to speak, as a result of some may have to change accounting packages if the one they use can’t be up to date.

Whereas you need to educate your purchasers about Making Tax Digital for VAT, you additionally must cowl myths, misinformation and incorrect assumptions.

For instance, purchasers might assume there’s one other mushy touchdown interval this time round for MTD for VAT.

In April 2019, this supplied further time for companies to be much less strict when decoding the digital linking guidelines, that means they may proceed to repeat and paste from one place to a different.

Nonetheless, there’s no mushy touchdown interval now for brand spanking new adopters of MTD for VAT.

There’s a new penalty points system to contemplate too, which begins from January 2023.

By far the most important false impression will likely be that MTD doesn’t apply to your voluntary VAT-registered purchasers (it does, after all).

There may additionally be beliefs that companies can opt-out of MTD for VAT, with purchasers maybe having heard about digital exclusion.

However that is restricted to distinctive particular person circumstances, equivalent to the place someone lives in a location with out web entry, or for individuals who can’t use know-how due to bodily or psychological impairments.

Schooling on Making Tax Digital for VAT could also be simply step one so that you can take along with your purchasers.

Chances are you’ll want to assist a few of them translate their current processes into ones which can be suitable with MTD for VAT.

If invoices are created outdoors the accounting software program, for instance, the main points should be entered into the system to be compliant with the digital information requirement.

This must be one thing that at all times occurs for every bill, in any other case there’s a risk of penalties from HMRC.

Key to serving to purchasers create MTD-compatible workflows is figuring out the factors at which accounting information is generated or manipulated.

Sometimes, this will likely be on the level at which gross sales and purchases are made.

On this occasion, ask your purchasers when paperwork is generated for VAT functions, as a result of it’s that VAT information that must be captured (equivalent to tax level, VAT fee, VAT quantity and so forth).

It’s after they obtain receipts, payments and invoices, for instance, that they’ll want to pay attention to MTD for VAT’s necessities.

Having gained expertise from the 2019 rollout of Making Tax Digital for VAT, you may section purchasers into lists that may decide how and whenever you assist them.

You would possibly section out those who need assistance first (equivalent to month-to-month VAT filers), or these which can be extra technically savvy and can maybe want much less assist general.

And it’s probably that a few of your purchasers will embrace MTD for VAT extra wholeheartedly than others, who might take into account it a troublesome and painful course of.

So why not leverage the purchasers that may with a view to assist the purchasers that may’t?

There’s a variety of methods you are able to do this, equivalent to by way of shopper get-togethers (in individual or on-line).

Some practices even run their very own non-public on-line chat boards on their web sites, the place purchasers can collect to talk to one another.

Onboarding purchasers to Making Tax Digital for VAT would possibly really feel like an obligation for accountancy practices, however it’s truly a solution to enhance publicity for what you do.

Savvy practices are utilizing it as a possibility to create new service choices which can be extra aligned the way in which the enterprise world operates these days.

Why not do the identical?

On the finish of the day, serving to purchasers with new processes could be a rewarding expertise in itself, and might help enhance shopper confidence and satisfaction in what you do for them.

Editor’s be aware: This text was first printed in January 2022 and has been up to date for relevance.

Making Tax Digital: A apply survival information

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