Industry Focus: Property
Making Tax Digital for property managers Making Tax Digital (MTD) for business is set to begin in April 2019. It is likely to be the most fundamental change to the UK tax system since the introduction of Self-Assessment. The aim of MTD is to help make the UK tax system more efficient and simpler so that small businesses can complete their returns with fewer errors. From April 1st VAT-registered businesses that are over the ÂŁ85K taxable turnover threshold will be required to record and submit their VAT returns online using approved accounting software such as Xero...
Patrick Caulfield ACA, Associate Director, Arthur Online After graduating from Durham University with a Masters in Economics, Patrick joined EY (London) where he became a chartered accountant. He then spent 3 years in M&A and investment banking with Citi Group and an early stage VC. Patrick now works at Arthur Online where he manages everything finance and investor related, from fundraising to shaping and rolling out Arthur Onlineâ€™s ambitious growth plans.
he change is being phased in due to several reasons. Previous tax reporting methods that often included transactions being manually recorded in accounting journals, which then resulted in many reporting inaccuracies being submitted to HMRC. HMRC hopes that by recording transactions online, there will be fewer miscalculations and a reduction in fraudulent activity. HMRC have also stated that one of their aims of MTD is to give businesses real-time data. There will be no more waiting until the end of the year to find out the total tax payable to HMRC. Instead, with a digitised tax system, HMRC will be able to build up and process this information in real-time to help prevent repayments owed to them building up. With the increased digitisation of accounting, the benefits of managing a property portfolio using an online, cloud-based 72 / Issue 18
system have never been greater. Arthur Online is looking to work in line with MTD and increase the ease by which you submit your VAT returns. The platform allows users to record VAT charged on all transactions, whether it be on sales invoices charged to tenants or on purchase invoices payable to contractors. By integrating Arthur Online and Xero together, property managers can carry out their general property management whilst not having to worry about the complexities of duplicating their tenant and property owner financial transactions in Xero. The integration will seamlessly combine the two systems together with the just the press of a button. 3 key MTD facts 1. VAT registered businesses will be required to maintain digital records
Whilst many VAT registered businesses will already be keeping digital accounting records, some smaller businesses may currently still be keeping manual records. Manual records will no longer meet the requirements of MTD and a transition to digital tools will be required. 2. Returns must use commercial software and not the HMRC online service Current research shows that 87% of VAT returns are carried out using the online service provided by HMRC. This will be withdrawn as part of the transition towards MTD and businesses will need to use a MTD-compliant software for their returns such as Xero. 3. Arthur Online can help. Arthur Online is fully integrated
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The independent magazine for Xero users, by Xero users