MTD for VAT: 7 ideas to assist purchasers with Making Tax Digital – Sage Recommendation United Kingdom


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MTD for VAT: 7 ideas to assist purchasers with Making Tax Digital – Sage Recommendation United Kingdom

Acquired new or present purchasers trying to change their processes so 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 can assist you assist your purchasers with MTD, we’ve created this text.

It covers the advantages of digital working and how one can educate your purchasers on how they should submit their VAT Returns, and lots 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 must 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 (presently £85,000).

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

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

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

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

However you’ll be able to assist your purchasers by speaking this to them, whereas emphasising the advantages.

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

It means companies all the time know their money stream place, to allow them to make good choices (and spot any issues earlier than they turn into uncontrolled).

And making a VAT Return if the accounting knowledge is already throughout 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 constructive and provoking message that may usually be buried beneath what appears to companies to be yet one more obligatory requirement from the federal government.

And it’s not simply purchasers that profit.

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

Begin your purchasers on the journey right this moment by serving to them use software program that’s MTD-ready and that can 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, included companies should use MTD for his or her corporation tax returns.

Listed here are seven methods you’ll be able to 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 are you going to do that?

Right here’s three simple and easy recommendations:

  1. Tack on info to the top of present conversations. Use each consumer touchpoint as an excuse to teach, and guarantee all members of your workers have the information to take action. Some practices have even added MTD messaging to their e mail signatures to make sure it’s all the time included in communications. Updating your web site and social media accounts is a sensible transfer.
  2. E mail blasts can preserve your purchasers updated. In reality, treating this identical to a advertising and marketing marketing campaign pays dividends as a result of try to be promoting new or completely different service choices that match with MTD’s necessities and what your purchasers want. Deal with this as a chance to promote elevated consciousness of what you supply.
  3. Webinars may also help you attain a lot of individuals. When you run the webinar as a Q&A session, the preliminary prep requirement is lowered too. Apprehensive about being stumped by a tough query? Let individuals know you might have to reply with a solution after the webinar. And video conferencing instruments comparable to Zoom and Microsoft Groups are basically free, simple to make use of, and extensively adopted.

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

They may suppose they will merely neglect about Making Tax Digital for VAT, and stick with it as they all the time have.

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

This would possibly appear to be an schooling concern. Nevertheless it’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 elementary, this could possibly 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 comparable to tax level dates, VAT charges, and so forth).

But when the consumer 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’ll be able to count on 4 W questions in speedy succession: Why, when, who, and what.

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

You possibly can reply it very simply by offering deadlines for the consumer to satisfy. This contains registration deadlines, begin days, and first submitting dates, as follows:

When do purchasers join MTD for VAT?

Shoppers shouldn’t enroll 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 like:

  • 1 April 2022: If the earlier VAT quarter ended 31 March 2022.
  • 1 Might 2022: If the earlier VAT quarter ended 30 April 2022.
  • 1 June 2022: If the earlier VAT quarter ended 31 Might 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 have to be filed:

  • 7 August 2022 for a VAT quarter starting 1 April 2022.
  • 7 September 2022 for a VAT quarter starting 1 Might 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 received’t allow them to proceed except that is recognized.

The software program can take completely different kinds, relying on the consumer’s wants, and try to be ready to assist with options.

Some could select to make use of bridging software with their present spreadsheets.

Others could use their present software program however add in an MTD for VAT submissions module.

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

Be sure 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 might have to modify accounting packages if the one they use can’t be up to date.

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

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

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

Nevertheless, there’s no comfortable touchdown interval now for brand new adopters of MTD for VAT.

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

By far the largest false impression might be that MTD doesn’t apply to your voluntary VAT-registered purchasers (it does, in fact).

There may also 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, comparable to the place any individual lives in a location with out web entry, or for individuals who can’t use know-how due to bodily or psychological impairments.

Training 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 present processes into ones which can be appropriate with MTD for VAT.

If invoices are created exterior the accounting software program, for instance, the small print should be entered into the system to be compliant with the digital data requirement.

This must be one thing that all the time occurs for each 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 knowledge is generated or manipulated.

Usually, this might 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 knowledge that must be captured (comparable to tax level, VAT charge, VAT quantity and so forth).

It’s once 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’ll be able to phase purchasers into lists that can decide how and if you assist them.

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

And it’s seemingly that a few of your purchasers will embrace MTD for VAT extra wholeheartedly than others, who could contemplate it a tough and painful course of.

So why not leverage the purchasers that may so as to assist the purchasers that may’t?

There’s various methods you are able to do this, comparable to by way of consumer get-togethers (in particular person 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, nevertheless it’s really a solution to enhance publicity for what you do.

Savvy practices are utilizing it as a chance 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 generally is a rewarding expertise in itself, and may also help enhance consumer confidence and satisfaction in what you do for them.

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

Making Tax Digital: A follow survival information

Want assist with Making Tax Digital, in your purchasers and your follow? This free information will provide help to prepare for MTD for VAT, Earnings Tax Self Evaluation and Company Tax.

Download your free guide


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