From April 2019, VAT registered businesses above the VAT registration threshold will be required to maintain digital records under Making Tax Digital (MTD). Unsurprisingly, software providers are not yet up to speed and, as previously announced, HMRC will not be providing their own free software for taxpayers to use.
The majority of VAT registered businesses already file quarterly returns online and MTD extends this provision so that the reporting itself is electronic, the return information being supplied to HMRC by MTD-compatible software. Spreadsheets will be permitted but manual entries into HMRC’s systems will not. Over the next 12 months businesses will need to ensure their systems are up to speed and compliant. One solution growing in popularity is the increase in cloud-based software, mainly due to the advantages it can offer to all businesses, including efficiency, connectivity, security and the ability to utilise real time information.
So, you may be asking, ‘What is the ‘Cloud’?’
The Cloud is a platform that stores data and information which is accessible anytime, anywhere, from any device.
There is the opportunity for equestrian businesses to use the Cloud as part of their every day record keeping, ensuring all aspects of their financial records are totally up to date and providing them with the real time information they require to run the business successfully.
THE ADVANTAGES OF USING CLOUD BASED SOFTWARE
Cost: upfront costs are reduced. There is no initial start-up cost but, instead, a monthly subscription cost. As accountancy and taxation rules and regulations change, the software will be automatically updated, at no additional cost.
Access: just having one computer, with only one user being able to access the information will be a thing of the past. Multiple users can access the information from smart phones and tablets, which will allow you to be connected to all your financial affairs at any time. Tailored user permissions allow you to give restricted access to users, allowing a better flow of information. Different users could be given read-only access allowing them to retrieve information that is important to them.
Time: bank statements can be automatically downloaded via a secure connection, eliminating the need to key in bank statements and reconcile using traditional methods. This frees up time that would have previously been spent entering each transaction.
Real time information: a major disadvantage of traditional accounting software is that key advisers do not have access to the most up to date financial information that could be used to spot opportunities for the business and nip any problems in the bud. Cloud accounting software can be tailored to provide a snapshot of the information that is most important to you at the click of a button, giving you the ability to concentrate on other aspects of the business.
Accountant relationships: with multi user access, your accountant can be logged in at the same time as you, providing live support and advice when you need it. Being cloud based also eliminates the need to backup files and email them to your accountant giving increased protection over your data.
With up to date, meaningful financial information, key decisions can be made on an informed and timely basis; this changes accountant/client relationships from being purely based on compliance and allows better collaboration with other professional advisers.