The 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 the benefits a property portfolio using an online, cloud-based 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 This will be withdrawn as part of the transition towards MTD and businesses will need to use a MTD-compliant software for their returns such as Xero.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 with HMRC approved cloud-based accounting software platforms, and includes an integration with Xero. Both platforms are compliant with MTD and therefore provide a perfect solution to your accounting needs. The integration will help reduce the handling of data where tenant and property owner financial details require inputting into both the property management software and accounting software. With the Arthur Online and Xero integration, financial data is seamlessly synchronised between the two platforms saving you countless hours of tedious administrative work.
What preparation do you need to do?
- Change or upgrade your software
The first step your businesses need to take is to upgrade from your existing software to new, MTD-compliant alternatives. This may include not just upgrading your accounting software but also upgrading your property management software. Many of the legacy software out there act as a stand-alone solution and do not make use of the benefits of open API integrations, which help streamline date entry and reduce admin time. Set-up costs, staff training and software familiarisation are just three of the factors that need to be taken into consideration when upgrading to new software. Making use of the training provided by the Arthur Online accountants and bookkeepers accreditation days and also Arthur Online’s Xero accredited adviser courses can help reduce time spent familiarising yourself with the various functions on these platforms.
- Embrace the change
Adopting new technology can often be a daunting task that is all too easy to leave until the last minute. However, MTD has the aim of streamlining what is currently a complicated process. Filing VAT returns online and keeping digital records will help reduce your workload and improve your businesses agility in the long term.
April may still be a month away, but it’s never too early to research your options and be prepared.
Arthur Online’s intuitive interface combined with its integration to Xero, means that managing the finances of your property portfolio have never been easier!