Making Tax Digital – A Final Reminder!

We have commented more on Making Tax Digital (MTD) than on any other subject in recent years’ newsletters and most farms with turnover exceeding £85,000 have already converted to cloud accounting software. 

If you have not, please take steps to arrange this now. Although Government announced a delay on 23 September, that delay is for income tax reporting only. If you are VAT registered and have not moved to MTD, you will be unable to submit your VAT returns from Spring 2022 – just when the new HMRC penalty regime is introduced.

Modern cloud accounting packages are much easier to use than previous generations of accounts software, but still require some familiarisation and practice, so conversion should not be left too late.

At present, the MTD requirements can be met by using spreadsheets and in expensive bridging software. We do not know whether that solution will still be available when the MTD income tax regime starts from Spring 2024 and, even if it is, we anticipate that managing deadlines and multiple returns (e.g. where a tax payer has multiple sources to report) will be challenging using spreadsheets.

For these (and other) reasons, we recommend that most businesses should adopt cloud accounting software. The main cloud accounting software’s are QuickBooks Online, Xero and Sage, although there are many alternatives; some are designed specifically for the farming industry. Over the last few years we have been impressed by how well many farmers (or their spouses) have taken to maintaining computer accounting records.

We can support you with set-up and training. Or if it isn’t for you, we can provide a bookkeeping service, or you could use a local self-employed bookkeeper.

Whichever option you choose, please arrange this now if you are VAT registered.