Making Tax Digital for VAT (MTDfV) is set to launch from April 2019 for VAT registered businesses with annual turnovers over £85,000. Updating your software to meet the new rules could also mean updating your hardware to cope.
Whilst some organisations may have an extra six months to prepare (e.g. some VAT groups and unincorporated charities), all entities need to urgently review their software to make sure it is up to date. For example, Sage and QuickBooks are looking to upgrade their software packages.
Apart from the additional costs of monthly subscriptions to MTDfV complaint software, organisations may need to upgrade their operating systems, hardware or servers, costing them hundreds or thousands of pounds.
The older the hardware and operating systems, the more likely any upgraded software will not work with either in an efficient manner or not work at all.
Organisations may also have to upgrade other software products if the hardware and operating systems are upgraded, thus incurring even more costs.
Rather than incurring such costs, some organisations are choosing to embrace the new generation of accounting software and use the cloud.
Software houses such as Xero, Sage Accounting and QuickBooks Online offer a cloud solution, meaning that only an internet connection is needed from any machine to log on. No hardware changes and often lower monthly fees!
In adopting a cloud-based solution, an organisation will have the advantage of always being on the latest version of the software to be able to cope with MTDfV, any changes to the regime and be more prepared for when full MTD is introduced for other taxes.
Apart from being software and thus MTDfV compliant through using the cloud, organisations can also benefit from the freedom to access their accounts at any time and from anywhere. They also save time and money through automation of processes/systems and bank feeds.