-->

Editor's Articles

Doing it digitally



In just under three months, HMRC will close its online VAT return filing for registered businesses and only accept returns sent using software that supports Making Tax Digital for VAT.  Are you ready for the transition?

On 1st April, the first phase of the new Making Tax Digital (MTD) legislation comes into force, requiring VAT-registered businesses with a taxable turnover above the £85,000 threshold to keep records digitally and use commercial accounting software to submit their VAT returns.

It’s the biggest shake-up to the tax system in decades and while it might sound daunting, it’s actually positive news for businesses in the long run. Having one central place where you can record your finances digitally, link your business and VAT information to all your transactions, calculate the VAT owed and then supply this data directly to HMRC will streamline the whole process, thereby saving time, reducing errors and cutting the risk of penalties.

Keeping records
In order to keep digital records, fish and chip shops will need to invest in MTD-compatible software. HMRC has been working closely with software providers to help bring a wide range of suitable products to market and has published a list on GOV.UK of available products as well as those suppliers that have software in development. Xero, Sage or QuickBooks are a good starting point with monthly packages ranging from £10 to £35 per month.

If you already use software to keep your business records you will need to check that it is MTD-compatible (or if a compatible product is in the pipeline). If so, great, you’re all ready to go - although you will be required to log in to your business tax account and register for Making Tax Digital. If it’s not compatible, then you’ll need to consider what software is suitable for your requirements.

If you don’t currently use any software, don’t be scared, keeping records in a digital form isn’t difficult. In fact, it’s estimated that around half of UK businesses use spreadsheets to help manage their finances, so the chances are you are already doing this to some extent. For shops that do fall into this category, HMRC understands that it will take some time to adopt the new system and is, therefore, allowing them to continue with this method for the time being (up until 2020 it is thought), however, you will need to use what’s called “bridging software” in order to file your returns with HMRC. There are a number of different options currently on the market, such as Tax Optimiser, Absolute Excel VAT Filer and Tax Calc, with prices starting from around £30 to £40 per year. Some providers are developing free bridging software, so keep an eye out for those too. 

Positive step
Of course, there’s going to be a level of uncertainty and resistance but HMRC is encouraging fish and chip shop owners to view MTD as a positive step as it will provide a much better overview of how a business is performing. And anyway, this is just the first of a number of digital changes coming our way, (MTD for income tax and corporation tax is expected to come into play after 2020) so it's best to embrace it now. It’s also worth bearing in mind that while chip shops with a taxable turnover below the VAT threshold will not have to operate MTD, they can still choose to do so voluntarily.

If you use an accountant, speak to them first about how to digitalise a paper-based system. Also look online as there are a host of masterclasses, webinars and tools to guide you through MTD as well as information on the HMRC website itself. Whether you migrate to a full accountancy software or use bridging software for the time being, a course of action must be taken because as of 1st April, HMRC will close its online VAT return filing for VAT registered businesses and the usual penalties will be applied if returns are late or for deliberate non-compliance.

__________________________________________________________________________________________________________________________

Did you know?
If your taxable turnover drops below the VAT registration threshold at any point after 1 April 2019 you are still required to continue to keep digital records and send HMRC your VAT returns using MTD-compatible software. This obligation doesn’t apply if you de-register from VAT or if you are exempt from MTD for VAT.

__________________________________________________________________________________________________________________________


The tax gap in 2016-2017 was estimated to be £33 billion, which is 5.7% of tax liabilities

__________________________________________________________________________________________________________________________

The Federation of Small Businesses is running a number of seminars across the country to answer any questions on MTD. Find out more by clicking here.


Archive

Community calls

With Christmas being the season of goodwill, it’s the ideal time to think about how your business can get involved in your local community during the forthcoming year

Shop cover

Wrapped helps fish and chip shop operators with that all-important question “How much cover do I need for my business?”

New fry-deas

350 portions of fish, 500 cones of chips, 320 slices of pizza, 300 pots of mushy peas and 500 cups of coffee were dished out to visitors hungry for new ideas at The Fish Frying & Fast Food Show on Sunday

Ideas & inspiration

The Fish Frying & Fast Food Show 2018 on Sunday 7th October at the NAEC, Stoneleigh Park, Warwickshire, is all about discovering the latest foods trends, forging new partnerships and finding great deals

A welcome interruption

Business interruption insurance is more important than most shop owners realise, says Wrapped

Casual dining still pulling in the punters

Casual dining continues to grow in Britain with visits up nearly 7%, equivalent to an extra 35 million visits compared to the previous 12 months