0800 0 787 187                                                                    Follow us
Zoosme Accountants
  • Home
  • About Us
    • Our Values
    • Our Technology
  • Services
    • Accounting and Finance
    • Payroll and HR
    • Personal Tax Returns
    • Digital Tax Account
    • Business and Strategic Planning
    • Grants and Funding Support
    • Freelancer or Contractor Service
  • Our Work
  • Prices
    • Limited Company
    • Sole Trader
    • Startups
    • Payroll and Additional Services
  • Our Blog
  • Contact Us

Goodbye Self Assessment: Hello Digital Tax Account

3/18/2015

0 Comments

 
Image of UK made up of fibre optics
George Osborne announced on the 18th March 2015 that the self assessment tax return process is to be replaced by a new digital tax account. So what does it all mean?

The digital tax accounts are designed to reduce hassle for individuals and small businesses that currently need to adhere to the bi-annual payment process and strict deadlines of the 31st October for paper filing and 31st January for online filing. The new process is expected to reduce the time taken to complete a tax return from 40 minutes to 10 minutes on average. This will also result in a cost saving for individuals who use an accountant to help complete their returns.

For small businesses, the new process will help them manage cashflow in their business more effectively. Businesses that experience seasonality trends will be able to contribute more to the tax pot when times are good and reduce payments when the market slows down again. This sort of monitoring will encourage business owners to take a look at their business to assess performance on a more regular basis to better manage the regularity of tax payments to the new digital tax accounts.

The benefit of being linking your bank account to the digital tax account is that, not only can you manage the payments to the tax account to satisfy HMRC requirements, but any rebates will be received very quickly back from HMRC to you. It's simply ensuring that the money is sitting in the right place on an almost real-time basis. You should feel safe in the knowledge that your bank account is not linked for monitoring purposes but simply for payment transfer purposes.

The risk of penalties is now massively reduced now that individuals and small businesses can contribute to the tax account at any time. And for small businesses that have to pay lots of different taxes at different times (VAT, National Insurance, Corporation Tax, Income Tax), the process is getting much easier to manage.

The Government are also working smarter this way with long term savings to be achieved with reduced administration and benefits in payment collections and payments. The knock on effect will be more money available for public services.

There will be a knock on impact to accountants in reduced revenues for those traditional accountants that work with their clients in completing the self assessment process. Zoosme Accountants was set up to work digitally so this news does not impact us and we applaud the Chancellor for introducing a system that offers so many benefits to tax payers and the small business community. I would like to see more small businesses taking steps to keep better records and manage their business performance. Zoosme Accountants have launched a service to help clients adopt the new tax process and start to bring their own businesses up to date with new technology. Click here to get more information.

This news demonstrates that the Government is fully supportive towards small businesses adopting digital processes to better manage finance. I welcome any questions or comments. If you would like to discuss any accounting issues that are affecting your business please contact me on murray@zoosme.com.

posted by Murray Pullin

0 Comments

UK VAT change coming into force on 1 April 2015

3/6/2015

0 Comments

 
Picture
On 1 April 2015, HMRC are introducing new VAT legislation on prompt payment discounts (PPD) to align the UK legislation with EU legislation.

HMRC have identified that there was a blackhole in the VAT system that resulted in revenue not being collected by the Government where discounts were offered and not taken up. The current rules allow for businesses to pay VAT back to the Government at the discounted rate regardless of whether the discount is taken up or not. Therefore, if all customers used the PPD term, there would not be an issue, but the rules allow for the business to make a profit on the transactions where the full amount is paid. This issue has got out of hand in more recent years where these discounts now being offered to consumers and less VAT is being paid to HMRC.

To overcome this the rules are changing. From 1 April 2015, VAT is to be paid on the full consideration actually received. The paperwork requirements are also changing with all prompt payment discounts being disclosed either on the full value invoice with a disclosure note about what the VAT is to be reclaimed by the customer should the PPD be accepted, or in the form of a credit note to be issued to the customer on receipt of discounted payment.

Both of these require more administration and for small businesses the impact of this additional administrative burden is bigger than the large companies that may have dedicated systems or finance teams to overcome these rules. The simplest approach is to adopt the issuing of a credit note. This means the template of the invoice does not have to be amended and does not require PPD VAT disclosures to be made on the invoice. A credit note is simply a negative invoice. These can be raised in your accounting solution in the invoice section with all values being entered as a negative value. The credit note can then be issued in the same way as the invoice.

If your accounting solution does not have this functionality, please get in touch and we can introduce you to a better way of managing the finances in your small business.

In summary, there is a change coming that will result in a HMRC blackhole being closed. Some businesses will see a financial impact as they can no longer profit from discounts not being taken from a VAT perspective. More of us will be impacted by the fact that we must ensure the correct records are kept in the event of a VAT audit.

posted by Murray Pullin

0 Comments

    Authors:

    Image of Murray Pullin

    Murray Pullin

    Founder and Managing Director of Zoosme Accountants. 

    View my profile on LinkedIn

    Archives

    November 2015
    July 2015
    May 2015
    April 2015
    March 2015
    February 2015

    Categories

    All
    Accounting
    Cloud
    Debate
    Digital Tax Account
    Hmrc
    Productivity
    Self Assessment
    Small Business
    Vat
    Webinar

    RSS Feed

© 2015 Zoosme Limited                                                      Privacy Policy and Cookie Information                                                                 Branding by Bluegg