MTD for VAT: 7 ideas to assist shoppers with Making Tax Digital

Bought new or current shoppers 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 shoppers it’s good to assist on this space will improve (if it hasn’t already).

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

It covers the advantages of digital working and educate your shoppers on how they should submit their VAT Returns, and lots extra too.

Plus, uncover how your apply can save money and time with this ROI calculator.

Right here’s what we cowl:

Which shoppers does Making Tax Digital for VAT apply to?

encourage shoppers to maneuver to digital methods of working

7 tricks to get shoppers with Making Tax Digital for VAT

Ultimate ideas on Making Tax Digital for VAT

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 (at the moment £85,000).

The remit for MTD for VAT expanded in April 2022. Now, the principles additionally apply to companies beneath the edge 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 threat breaking the regulation but it surely additionally places the enterprise at a aggressive drawback.

When trying to adjust to MTD’s guidelines, companies that cling to outdated methods of working and rely largely on paper need to put in additional effort than people who don’t.

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

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

It means companies all the time know their money move place, to allow them to make sensible choices (and spot any issues earlier than they grow to be uncontrolled).

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

It’s this constructive and galvanizing message that may usually be buried beneath what appears to companies to be one more necessary requirement from the federal government.

And it’s not simply shoppers that profit.

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

Begin your shoppers on the journey at the moment by serving to them use software program that’s MTD-ready and that can help all future MTD compliance necessities.

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

Listed below are seven methods you may assist and help your shoppers 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 shoppers, this is smart.

So how will you do that?

Right here’s three straightforward and easy recommendations:

  1. Tack on info to the tip of current conversations. Use each shopper 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 maintain your shoppers updated. Actually, treating this similar to a advertising and marketing marketing campaign pays 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 shoppers want. Deal with this as a possibility to promote elevated consciousness of what you supply.
  3. Webinars can assist you attain a lot of individuals. In the event you run the webinar as a Q&A session, the preliminary prep requirement is decreased too. Fearful 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 resembling Zoom and Microsoft Groups are basically free, straightforward to make use of, and broadly adopted.

This may catch out shoppers who ask you to maintain their VAT Returns for them.

They could 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 acquired to maintain VAT accounting data digitally, and know in regards to the digital linking guidelines (no copy/reducing and pasting of key VAT information from one vacation spot to a different).

This may look like an training difficulty. Nevertheless it’s greater than that.

You could want to assist your shoppers undertake a digital answer 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 resembling 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 shoppers first hear that Making Tax Digital goes to have an effect on them, you may anticipate 4 W questions in fast succession: Why, when, who, and what.

The ‘when’ query is prone to be probably the most urgent that shoppers 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 shopper to satisfy. This consists of registration deadlines, begin days, and first submitting dates, as follows:

When do shoppers join MTD for VAT?

Shoppers shouldn’t join lower than:

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

When do shoppers begin utilizing MTD for VAT?

For shoppers who file quarterly VAT Returns, these are examples of what begin dates seem 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 shoppers 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 shoppers can register for Making Tax Digital for VAT, they should know which MTD-recognised accounting software program they’re going to make use of. HMRC gained’t allow them to proceed until that is recognized.

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

Some might select to make use of bridging software program 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 they usually merely have to register for MTD, after which authenticate throughout the software program.

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

Serving to shoppers with software program is without doubt one of the instant 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 shoppers about Making Tax Digital for VAT, you additionally have to cowl myths, misinformation and incorrect assumptions.

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

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

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

There’s a new penalty factors 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 shoppers (it does, after all).

There may additionally be beliefs that companies can opt-out of MTD for VAT, with shoppers 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.

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

You could want to assist a few of them translate their current 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 every bill, in any other case there’s a threat of penalties from HMRC.

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

Usually, this might be on the level at which gross sales and purchases are made.

On this occasion, ask your shoppers when paperwork is generated for VAT functions, as a result of it’s that VAT information that must be captured (resembling tax level, VAT price, 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 may section shoppers into lists that can decide how and whenever you assist them.

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

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

So why not leverage the shoppers that may as a way to assist the shoppers that may’t?

There’s plenty of methods you are able to do this, resembling by way of shopper 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 shoppers can collect to talk to one another.

Onboarding shoppers to Making Tax Digital for VAT may really feel like an obligation for accountancy practices, but it surely’s really a solution to improve publicity for what you do.

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

Why not do the identical?

On the finish of the day, serving to shoppers with new processes could be a rewarding expertise in itself, and can assist improve shopper 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 apply survival information

Want help with Making Tax Digital, in your shoppers and your apply? This free information will enable you prepare for MTD for VAT, Revenue Tax Self Evaluation and Company Tax.

Obtain your free information