So according to HMRC there’s no going back, MTD for VAT really is going to happen. From next April you will have to be able to file your VAT Return through ‘functionally compatible software’ – and suddenly businesses are becoming aware of what this means and the changes they might have to make just to able to carry on doing something they’ve had no problems with for years and which is a fundamental part of their business!
But does this have to be bad news? Yes, it is potentially a problem which has to be resolved – but in looking for a solution maybe businesses have an opportunity to have a look at their accounting systems, carry out an in-depth review - and make some long overdue changes.
Ask yourself some questions:
- When did you last question how you do your accounts?
- Are you having to wait for accounts information after a period end, because of the length of time it takes to get everything updated?
- Are you exporting information from your accounting software and then manipulating it just to get the information in a format where it gives you the insights you need?
- Have you got processes – timesheets, invoicing, projects, inventory, expense claims – where you’re using spreadsheets and then manually entering that information into your accounting system?
- What frustrations do you have with your accounting system which you’ve tolerated because there was no other way?
- Furthermore many businesses have software which they acquired years ago and which may well now be unsupported. Or the hardware it sits on might be coming to the end of its life. Imagine what would happen if one day the software stopped working and you can’t get a backup restored. What if you had a fire, a break-in, any one of a number of disaster scenarios which could completely cripple your ability to carry out your business.
How times have changed
Cloud-based software will take away the need for back up routines, allow unlimited users to log on from any device and from anywhere, deliver insights at the click of a button. It will streamline your processes, enable you to connect your online bank to your accounts so you can be sure of your cash position, your debtor position, your creditor position. You can link your accounting app to one or more of the 600 plus other apps available to create a system which will cover all your business needs, seamlessly connected. You can at last bring together your inventory, your retail sales, your online sales, your bank transactions, your CRM – all at a fraction of the cost of one of the ERP systems you might have had to use historically to get that level of functionality.
So – don’t look on MTD for VAT purely as a problem. Take the opportunity to assess what your business needs are, identify those areas where you would like to see improved information and efficiencies – and then talk to us to see what your options are.
And maybe you might even end up thanking HMRC for forcing this change on you…
For more information, contact Hilary Dyson (email@example.com) or your usual AAB Advisor.