Starting as soon as 2019, UK businesses will have to start transitioning to a digital tax system – where tax is filed online every quarter. It’s a big change all. Here are Xero’s tips to help you prepare.
What does it mean to you?
You will need to use some form of software to keep your VAT records and file your VAT returns.
For other forms of tax, businesses will likely be required to submit their accounts every quarter, so they’ll need to use the services of your firm more often. Some clients may feel it’s a burden. In reality, frequent interactions should be a lot more efficient because there won’t be big backlogs of work to get through.
More frequent submissions will also help your clients avoid nasty surprises. Big tax bills can accumulate over the course of a year but when tax is calculated quarterly, things are far less likely to get out of hand. The new system will also create more opportunities for advisors to help with tax planning.
If your clients choose to use accounting software, they should make sure it has online capabilities. Desktop accounting software hasn’t traditionally been able to submit tax online.
As a bonus, online accounting software also allows you and your client to:
- access the business’s accounts from anywhere there’s internet
- create ‘bank feeds’ so transaction data flows straight into the ledger
- collaborate online by leaving and receiving messages within the software
Online accounting software can also sync with other online services such as POS software, inventory management software, or time-recording apps.