Hot Topic Making Tax Digital for Business

The government have issued information on how Making Tax Digital for Business (MTDfB) is expected to work for VAT once the rules are introduced in April 2019.

Under the proposed rules, which have been issued subject to consultation, VAT registered businesses with turnover over the VAT registration threshold will be required to submit their VAT return digitally using software. Businesses with a turnover above the VAT threshold (currently £85,000) will have to:

  • keep their records digitally (for VAT purposes only) and
  • provide their VAT return information to HMRC through Making Tax Digital (MTD) functional compatible software.

It has also been confirmed that MTD will be available on a voluntary basis to other businesses, for both VAT and income tax.

Exemptions will be available where HMRC are satisfied the business is run by a practising member of a religious society or order whose beliefs are incompatible with the use of electronic communications, some insolvent businesses; or where HMRC are satisfied that it is not reasonably practicable to make a return using an electronic return system for reasons of disability, age, remoteness of location or any other reason.

The proposed rules include provisions that where a business is in scope for MTD the business must use functional compatible software to meet the new requirements. This software will either be a software program or set of compatible software programs which can connect to HMRC systems via an Application Programming Interface (API). The functions of the compatible software include:

  • keeping records in a specified digital form
  • preserving digital records in a specified digital form
  • creating a VAT return from the digital records and providing HMRC with this information digitally
  • providing HMRC with VAT data on a voluntary basis and
  • receiving information from HMRC via the API platform that the business has complied.

Businesses will need to preserve digital records in the software for up to six years. The digital records include:

  • ‘designatory data’ including the business name, principal place of business and VAT registration number together with information about which VAT accounting schemes they use
  • the VAT account that each VAT registered business must keep, by law, and
  • information about supplies made and received.

Further information on the required information can be found in Annex 1.

The government will make the final detailed requirements available to the software providers by April 2018 to allow time for the software to be developed and tested prior to the rules coming into effect from April 2019.

VAT returns

Businesses within the scope of MTD for VAT will be required to submit their VAT returns using their functional compatible software.

The information contained with the VAT return will be generated by pulling information from the digital records. This information will contain as a minimum the 9 boxes required for the completion of the VAT return but can also contain a specific data set of supplementary information, all of which will be pulled from the digital records.

Businesses submitting monthly or non-standard period returns will be able to continue to do so. The VAT annual accounting scheme will also be retained with the current conditions. Businesses making these types of returns will also be required to keep digital records and submit their VAT returns through software.

Under the new rules some businesses may choose to voluntarily provide further information:

Periodic updates
Businesses will be able to submit VAT information more frequently than their VAT return obligations require on a voluntary basis as a ‘voluntary update’.
Supplementary data
HMRC believes that businesses and HMRC could benefit from the submission of supplementary data detailing how the figures in the return are arrived at. HMRC believe this additional data will help them target non compliance. The software will allow for the voluntary submission of supplementary VAT data as part of a VAT return or a voluntary update. This will allow HMRC to test with businesses the extent to which they and HMRC can benefit from such supplementary data.

Timescale

VAT is the first tax to be reportable under MTD and businesses within the scope of MTD will need to keep their records digitally, using approved MTD functional compatible software, from 1 April 2019. The software will create the return from the digital records and this will need to be submitted under MTD for return periods starting on or after 1 April 2019.

We will keep you informed of developments in this area and ensure we are ready to deal with the new requirements. Please contact us for more information 0116 2423400

What is the VAT cash accounting scheme?

What is the VAT cash accounting scheme?

The VAT cash accounting scheme is a useful tool for many small businesses, as you only pay the VAT on your sales to HMRC once you have received payment yourself.

However, you may only reclaim VAT on your purchases from HMRC when payment of the invoice has been made.

You can join the cash accounting scheme if your turnover is less than £1.35m, and can continue to use the scheme until your turnover reaches more than £1.6m.

Your business should be eligible to use the scheme if you meet the threshold requirement, unless your VAT affairs are not up-to-date, you have been convicted of a VAT offence or have been penalised for evading VAT over the past 12 months.

What is the advantage of using cash accounting?

Clearly the main benefit of joining this VAT scheme is in the cash flow benefits it provides. If you have a late paying client for example, you will not have to account for the VAT on any outstanding sales invoices until you have been paid. In fact, if you incur any bad debts, the VAT will never need to be paid to HMRC.

What is the disadvantage of using cash accounting?

There may be some disadvantages, depending on your situation.  For example, as you cannot reclaim the VAT on any purchases you make until payment is made, this could cause cashflow problems if you buy a substantial amount of stock on credit.

Joining the cash accounting scheme

You do not need to inform HMRC if you want to join the scheme. However, you must start at the beginning of a new VAT quarter.

You can also leave the scheme at the end of any VAT quarter, if necessary, or if your taxable turnover reaches the £1.6m mark.

If you would like any assistance on joining, leaving or any further information on the cash accounting scheme, then feel free to contact  the office on 0116 242 3400.

Tom Luckett,  Accounts & Tax 

We did it ! 2017 Challenge – The Llyn Peninsula

This year’s challenge was a 46 mile, two day hike around the Llyn Peninsula in Wales.

Having walked similar distances in the past, we thought that we knew what we were letting ourselves in for …

However, we had not anticipated the many obstacles along the way, including:

Ankle deep boggy mud

Steep and slippery climbs and descents

No pubs on route

Wet feet from start to finish

High tide (meaning we had to wade waist deep into the sea)

Cows

Rain

This was probably our toughest challenge so far.  Our support team were unable to relax and had to come to our rescue twice on day one.

Eventually, most of us made it to the finish line (the pub) for a well-earned pint!

We would like to thank everybody that supported and sponsored us.  So far we have raised over £2,000 for our charity of the year, The Alzheimer’s Society.

If you would like to support us, please visit this link: https://www.justgiving.com/fundraising/torr-waterfield1

Some pictures from the walk:

Day 1 – Our team of 10 set off from Nefyn Golf Course:

We made our way along.jpg

We made our way along the coastline, through the mud:

2nd Pic sam k.png

3rd pic.jpg

Stu and the team.jpg

We got a bit wet:

matt.jpg

Look out for the blue signs:

sign.jpg

Seaweed fight:

Brook & Mat Seaweed.jpg

Day 2 – There were a few casualties on day one, our team is down to 5:

day 2.png

Still smiling in the rain:

MCW rain.jpg

Nice views, but still a long way to go:

Views

views 2.jpg

 

Feeding the wild horses: 

Wid horses.jpg

The end:

The End.jpg

If you would like to view some more photos and videos please visit our Facebook page https://www.facebook.com/Torrwaterfield/ 

Stuart Caney, Accounts & Tax 

 

 

Are you due a tax refund, or is it a fake HMRC email / phone call?

In the current cyber-world attempted fraud is always increasing and taxpayers need to watch out not only for scam emails and texts but phone calls too.

Phishing emails are designed to steal personal or financial details and may also deliver malicious software.  Some of the most common examples involve HMRC and an email advising a taxpayer about a “tax refund notification”.  It asks the recipient to click on a link, which then requests personal banking details – leading individuals unwittingly to compromise their financial security.  HMRC scam emails often contain the taxman’s logo and official style reference numbers and increasingly appear to be genuine communications.  Scammers often sign off using the name of an actual member of HMRC staff.  These criminals are getting cleverer all the time sending their emails at peak times i.e. January, when it’s the deadline for completing your self-assessment return, and July, being the deadline for your tax credits submission.

Tax payers please take note that HMRC do not make contact by email or phone to advise you of a refund and never give personal information over the phone to someone you do not know.  If you are in any doubt contact your accountant/advisor immediately.

An example of a typical phishing email purporting to be from HMRC is shown below:

HMRC SCam

If you think you may have received something that isn’t legitimate or you’re unsure then please contact us on 0116 2423400

Mark Cunnold, Client Manager 

Thinking of an Upgrade?

If the seemingly endless adverts are to be believed then if you subscribe to online bookkeeping software such as QuickBooks or Xero then your bookkeeping will become effortless, will probably be done in a coffee shop or on the go and will leave your accountant kissing an iPad with glee.

Whilst new software isn’t going to change your life, there is a lot to be said for having access to your records from any laptop/tablet/phone and from anywhere with a decent internet connection.

Online bookkeeping software allows you to send invoices and quotes to potential customers from your phone, enter purchase invoices from the sofa and even have bank transactions feed directly from your bank into the software to reduce the time taken to reconcile your bank.

The software can often be used by multiple users simultaneously, are compatible with Windows, Apple & Android operating systems and have a range of add-ons to allow data to be linked with third party software such as GoCardless or iZettle.

Cloud based software is constantly backed-up and saved by the software provider, and you can grant us direct access so there is no more need for taking and sending over backups. The software is constantly updated too so there’s no need to upgrade every few years.

If you’d like to discuss the packages available for your bookkeeping needs, or if you’re a Sage user and looking to upgrade to one of their subscription based products, please contact us and we can find the best option for you – we might even be able to obtain a lower subscription cost compared to going direct.

 

Matt Smith, Accounts Audit & Tax  

0116 24243400

We like to think we’re not your average accountants.

At Torr Waterfield we pride ourselves on steering away from the typical stereotype of ‘old boring accountants’.

Elbert Hubbard, the American writer, publisher, artist and philosopher is credited with this quote:

“The typical accountant is a man, past middle age, spare, wrinkled, intelligent, cold, passive, non-committal, with eyes like a cod-fish; polite in contact but at the same time unresponsive, calm and damnably composed as a concrete post or a plaster of Paris cast; a petrification with a heart of feldspar and without charm of the friendly germ, minus bowels, passion or sense of humour. Happily they never reproduce and all of them finally go to Hell” 

We think Elbert Hubbard is wrong!

For one, our team is certainly not dominated by middle aged men. We have an ever increasing team of 35+ people with male and female at an almost equal ratio. We have a mixed bag of ages including, yes, your middle aged man, but we have trainees and apprentices also. This summer we took on two apprentices in business administration and have had two new trainees join the accounts team recently.

We like to socialise at Torr Waterfield whether it be a cheeky pint in the pub on a Friday or one of our many team building activities. We aim to all go out together quarterly and have previously been to laser quest, virtual golf, held a bbq and most recently we went to Nottingham dog racing.  These activities really help our office work as a unit and allow staff to communicate with each other more than just on a day to day basis.

We love Leicester!

We’re also Leicester lovers, whether it is Leicester City Football Club or Leicester Tigers and even local bands like The Moderators. The team were thrilled that Leicester won the premier league and we celebrated by all attending the Parade and wearing blue in the office. When local band The Moderators perform it is always a date that goes in the diary for many of the team. Mark Cunnold is an avid follower and loves nothing more than having a good old mosh at their gigs.

Want to know even more about us?

On our website we have a meet the team section.  Click here and see which director used to get paid £10 a night to body bop and break-dance in a Blackpool nightclub in the summer?

Hollie Crown, Office Manager

Hollie Crown 2 April 2012 

torrwaterfield are taking on The Three Peaks

Back in 2009 Torr Waterfield completed the Yorkshire three peaks challenge. Well that was just the warm up…..now it’s time for the real thing. The Torr Waterfield team are taking on all three peaks Ben Nevis, Scafell Pike and Snowden.

The aim is to complete the three peaks in 24 hours and raise as much money as possible for Bamboozle Theatre Charity. Please click here to take a look at the wonderful work they do. 

The Basic Outline of the challenge:

Friday 28th June – Travel to Fort William (420 miles – 8 hours) & stay overnight

Saturday 29th June – 5pm start climbing Ben Nevis (1344 meters – 10.5 miles up and down)

10pm – Finish Ben Nevis and start drive to Scafell Pike (245 miles – 6 hours)

Sunday 30th June – 4am Arrive and start climbing Scafell Pike (978 meters – 6 miles up and down)

8am Finish Scafell Pike and start drive to Snowdon (213 miles – 5 Hours)

1pm Arrive and start climbing Snowdon (Miners track) (1058 meters – 8 miles up and down)

5pm FINISH Snowdon

Over the next few months leading up to the challenge there will be lots of training (and no doubt lots of blisters). We will keep you posted each week with how the training is going, the donations being raised and why members of the team chose to take on the demanding challenge.