It’s been a difficult year for many small businesses in the UK.
Contending with challenges around COVID-19 as well as uncertainties associated with Brexit. That’s before we take into account upcoming changes to Making Tax Digital (MTD).
Since it was first implemented in the UK almost two years ago, there have been a number of important changes to the way small businesses manage and report their tax. We understand that it isn’t always easy to stay on top of these types of changes. So we are doing everything we can to keep you updated, so you can prepare.
New changes to MTD The next major milestone is for all VAT-registered businesses to sign up to MTD for VAT by April 2022. After that date, all VAT-registered businesses will need to keep digital records and submit their VAT Returns using MTD from within Xero or other API-enabled software.
HMRC has also recently announced that non-MTD VAT submissions using software providers will no longer be supported from April 2021. This means that quarterly VAT periods ending in December, January or February 2021 will be the last that you can submit in Xero using the old VAT Return.
How to prepare for this change
If Purple Accounts already looks after your VAT and is appointed agent - you don't need to do a thing - it;s all taken care of by us.
If you look after your own VAT, to prepare for this change, you have 3 options:
The first is to sign up to MTD for VAT voluntarily ( you’ll be mandated to join MTD from April 2022 anyway).
The second is to generate VAT amounts using our new non-MTD VAT Return in Xero, which is designed for businesses who are not ready for MTD (such as those under the VAT threshold or part of a VAT group.) If you choose to use the non-MTD VAT Return in Xero, you will be required to submit the return manually using HMRC online services or by using MTD bridging software.
The third is to get it off your to do list and pass it to Purple Accounts. Just ask and we can take care of this for you.
This will be available from 23 November 2020 and is designed for use if you’re not ready to make the move to MTD. It will also be the default option for new trials and subscriptions moving forward. You may notice that the new non-MTD VAT Return looks very similar to the existing MTD one. We did this intentionally, so it will be easier for businesses to transition to MTD VAT Returns in the year ahead.
This includes all the functionality of our existing MTD VAT Return for generating VAT amounts, as well as some new features that will improve your workflow. For example, the ability to calculate late claims for a previous VAT period.
Start preparing now While there is some time before you will no longer be able to submit non-MTD VAT returns via Xero, it’s a good idea to start preparing your business early, so there's no rush when it does happen.
You can ask us to take this over for you just my contacting david@purpleaccounts or call 01925 268753
Article adapted from Xero blog.