Received new or current purchasers trying to change their processes in order that they adhere to Making Tax Digital for VAT?
With all VAT registered companies having to comply with Making Tax Digital (MTD) for VAT guidelines, the variety of purchasers it is advisable to 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 easy methods 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
Which purchasers does Making Tax Digital for VAT apply to?
All VAT-registered companies need to comply with 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 underneath the brink which might be registered for VAT (except they’re exempt)..
The best way to encourage purchasers to maneuver to digital methods of working
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 legislation nevertheless it additionally places the enterprise at a aggressive drawback.
When trying to adjust to MTD’s guidelines, companies that cling to previous methods of working and rely largely on paper need to 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 simply hours.
It means companies at all times know their money circulation place, to allow them to make good selections (and spot any issues earlier than they grow to be uncontrolled).
And making a VAT Return if the accounting knowledge 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 usually 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 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 at this time 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.
7 tricks to get purchasers prepared for Making Tax Digital for VAT
Listed below are seven methods you may assist and assist your purchasers with Making Tax Digital for VAT.
1. Educate your purchasers concerning the necessities of Making Tax Digital
HMRC is counting on accountants to coach concerning the specifics of MTD for VAT.
Because you intimately perceive the conditions of your purchasers, this is sensible.
So how will you do that?
Right here’s three straightforward and easy solutions:
- Tack on data to the tip of current conversations. Use each consumer touchpoint as an excuse to coach, 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 at all times included in communications. Updating your web site and social media accounts is a smart transfer.
- E mail blasts can maintain your purchasers updated. Actually, treating this identical to a advertising and marketing marketing campaign can pay dividends as a result of you have 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 possibility to promote elevated consciousness of what you supply.
- Webinars might help you attain plenty of individuals. In case you run the webinar as a Q&A session, the preliminary prep requirement is diminished too. Frightened about being stumped by a tough query? Let individuals know you’ll have to reply with a solution after the webinar. And video conferencing instruments resembling Zoom and Microsoft Groups are primarily free, straightforward to make use of, and extensively adopted.
2. Assist purchasers change to digital file protecting
This would possibly catch out purchasers who ask you to maintain their VAT Returns for them.
They may assume they will merely neglect about Making Tax Digital for VAT, and keep it up as they at all times have.
However they’ve nonetheless received to maintain VAT accounting data digitally, and know concerning the digital linking guidelines (no copy/reducing and pasting of key VAT knowledge from one vacation spot to a different).
This would possibly seem to be an schooling challenge. However it’s greater than that.
You could want to assist your purchasers undertake a digital resolution that’s proper for his or her wants.
At its most elementary, this might 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 resembling tax level dates, VAT charges, and so forth).
But when the consumer makes use of accounting software program that connects to your programs, which in flip makes producing VAT Returns a lot simpler, it’s a win-win state of affairs for each you and them.
3. Present calendars and deadlines for purchasers
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 some of the 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 consumer to fulfill. This contains 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 like:
- 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.
4. Assist purchasers select software program for Making Tax Digital
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 except that is identified.
The software program can take completely different types, relying on the consumer’s wants, and you have 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 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 without doubt one of the speedy 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.
5. Clear up misconceptions about MTD for VAT
Whereas you must 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 gentle touchdown interval this time round for MTD for VAT.
In April 2019, this offered extra time for companies to be much less strict when decoding the digital linking guidelines, which means they may proceed to repeat and paste from one place to a different.
Nonetheless, there’s no gentle touchdown interval now for brand new adopters of MTD for VAT.
There’s a new penalty points system to think about too, which begins from January 2023.
By far the most important false impression might 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, resembling the place any individual lives in a location with out web entry, or for individuals who can’t use expertise due to bodily or psychological impairments.
6. Assist purchasers create end-to-end MTD for VAT workflows
Training on Making Tax Digital for VAT could also be simply step one so that you can take along with your purchasers.
You could want to assist a few of them translate their current processes into ones which might be suitable with MTD for VAT.
If invoices are created exterior the accounting software program, for instance, the small print have to be entered into the system to be compliant with the digital data requirement.
This must be one thing that at all times 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.
Sometimes, 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 (resembling tax level, VAT charge, VAT quantity and so forth).
It’s after they obtain receipts, payments and invoices, for instance, that they’ll want to concentrate on MTD for VAT’s necessities.
7. Assist your purchasers assist one another
Having gained expertise from the 2019 rollout of Making Tax Digital for VAT, you may phase purchasers into lists that may decide how and if you assist them.
You would possibly phase out those who need assistance first (resembling month-to-month VAT filers), or these which might be extra technically savvy and can maybe want much less assist total.
And it’s doubtless that a few of your purchasers will embrace MTD for VAT extra wholeheartedly than others, who might contemplate it a tough and painful course of.
So why not leverage the purchasers that may to be able to assist the purchasers that may’t?
There’s numerous methods you are able to do this, resembling through consumer get-togethers (in individual or on-line).
Some practices even run their very own personal on-line chat boards on their web sites, the place purchasers can collect to talk to one another.
Ultimate ideas on Making Tax Digital for VAT
Onboarding purchasers to Making Tax Digital for VAT would possibly really feel like an obligation for accountancy practices, nevertheless it’s really a option to enhance publicity for what you do.
Savvy practices are utilizing it as a possibility to create new service choices which might 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 consumer confidence and satisfaction in what you do for them.
Editor’s notice: This text was first revealed in January 2022 and has been up to date for relevance.
Making Tax Digital: A follow survival information
Want assist with Making Tax Digital, to your purchasers and your follow? This free information will provide help to prepare for MTD for VAT, Earnings Tax Self Evaluation and Company Tax.
