Preparing for MTD - Making Tax Digital
As from 1 April 2019 HMRC will be introducing MTD (Making Tax Digital).
We're currently in the process of getting accreditation with HMRC so that you will be able to file your VAT returns using Easify in line with the new MTD regulations.
Easify will generate your VAT return and file it with HMRC for you as long as you do the following:
Enter all your Sales into Easify
Enter all your Purchases and Expenses into Easify
What can you do to prepare for this?
If you start now then it’s good practice for when MTD comes in. The main thing to remember is to add ALL your Sales and ALL your Purchases & Expenses onto Easify.
Sales
Most sales are probably already added as you go about your daily business selling items though the Point of Sale and the Order and Quotes screen, however it’s worth making sure that all your sales are included.
For instance if you’re a service company you might receive a regular payment from a customer so they can call you up whenever they wish and obtain telephone advice, however you don’t currently issue an invoice for this as they don’t need one for their records. Under MTD you will need to raise an order on Easify for this.
It’s also worth looking at any commission or cashback schemes that you automatically receive payments for - again you will need to raise an order in Easify for such payments.
Purchasing
If you currently use the Easify Purchasing system to raise purchases to buy stock and then book the products into stock, then Easify will automatically have a record of your purchases. If you don’t currently use this feature then you will need to ensure that all your purchases are added to Easify.
You will also need to make sure you add all other expenses, such as heating, rent, postal expenses etc. Unlike traditional accounting packages Easify does not distinguish between an expense and a purchase – you can just add them all as purchases.
Remember: this doesn’t mean that you have to use Easify to book in and control your stock - you can just enter purchases and expenses into Easify without the purchases being associated with any stock items. As long as Easify has a record of all your income and expenses you should be able to use it for MTD.
Things to Remember
Make sure that every sale and every purchase has the correct VAT code selected.
Easify will support both the Accrual and the Cash Accounting Schemes. If you’re under the Cash VAT Accounting Scheme (i.e. you pay the VAT when the order or purchase is paid) you will need to make sure you use the Billing section of orders and purchases and process payments for all your sales and purchases so Easify knows to include these on your VAT return.
Reconciling
It’s good business practice to reconcile your accounts before filing your VAT return so Easify will be introducing a Reconciliation feature which will allow you to check your bank statement against Easify to make sure you haven’t missed any income or expenses.
Here you will also be able to add any interest you have received on your savings and any interest and bank charges you have incurred.
In addition before you file your VAT return, Easify will allow you to see everything that is being included on the return so that you can ensure that there are no errors before submitting it to HMRC.