The Courier & Advertiser (Fife Edition)
Be prepared for digital taxing
Farm businesses have less than a year to get ready for new VAT rules that require them to keep digital records and submit their returns from compliant software.
With many businesses and individuals already banking, paying bills and interacting online, the government’s plans to digitalise the tax system through Making Tax Digital (MTD) is a logical step. Digitalising record keeping is one step many businesses have already taken by adopting a cloud-based accounting platform.
As broadband becomes increasingly accessible in rural locations, we are seeing more of our farming clients embracing this digital future and moving away from traditional methods such as manual ledgers, spreadsheets or desktop packages.
As well as ensuring you are compliant with future MTD regulations, there are many other significant benefits to moving your record keeping to a cloud accounting platform, such as automated bank feeds, information is available anytime and anywhere, a clear financial overview and real-time collaboration with your advisers.
Given the advantages of cloud accounting, it will come as no surprise there are numerous cloud accounting platforms available to choose from. Whether you run a small farm with a few sheep or a herd of a thousand cows, there is a cloud solution for you.
MTD changes are so fundamental it is essential to review your current record keeping systems. What category do you fall into? 1 VAT registered and above VAT threshold – mandatory
If your farm business is registered for VAT and your turnover is above the threshold of £85,000, you will be required to keep digital accounting records and to file your VAT returns using MTD compliant software from April 2019 (the first VAT period starting on or after April 1 2019).
The current online VAT return will not meet the requirements. Pilots of MTD for VAT are under way.
If you fall into this category it is essential you speak to your accountant as soon as possible to discuss your transition to MTD to ensure you are ready for MTD reporting for VAT by next spring, as well as considering the transition of other taxes.
2 VAT registered but below the VAT threshold – voluntary
If your farm business is registered for VAT but your turnover is below the threshold of £85,000, you will not be required to keep digital accounting records or to file your returns using MTD compliant software until 2020 or later.
You can, however, voluntarily opt to move to keeping digital records which could be better for you in the long run. The current online VAT return will not meet the requirements of MTD but will continue to be available until at least spring 2020.
Although there is not an obligation or an immediate deadline, this is a good opportunity to start thinking about moving your records and reporting online. 3 Non-VAT registered If you are not VAT registered, MTD for VAT will only be relevant to you if you become VAT registered.
Other taxes – looking ahead. Income Tax (self-employed, partnerships, trusts and landlords who complete selfassessment tax returns): MTD is expected to become mandatory for income tax reporting but not before 2020.
Pilots of MTD for income tax started on a small scale in April 2017 and will be rolled out to all businesses who wish to participate in the coming months.
Corporation Tax (companies): The timings for MTD for corporation tax have yet to be confirmed but it will not become mandatory before April 2020.
MTD changes are so fundamental it is essential to review your current record keeping system