Making Tax Digital (MTD) is the process of streamlining HMRC returns and it is mandatory for all VAT registered businesses. This is not entirely news, but with only 12% of organisations, the deadline for Making Tax Digital is getting closer and businesses should start getting compliant the sooner, the better! To properly understand the impact of Making Tax Digital, I have interviewed our SME finance expert, Sandra Addison, who has shared her views, concerns and advice on this very debated topic.1. What have you done to prepare for Making Tax Digital?
The first step in preparing for MTD was to upgrade the accounting software we are using, making sure it’s compatible and compliant! My advice is to double check with your IT lead to install the patch so that everything is set up correctly and ready to run smoothly. I believe HMRC is aware of any future issues that could arise, so I would expect more trained support to be available to deal with any possible inquiries.
Overall, to hit the deadline stress-free, I suggest businesses look into this matter soon, preferably before April. I only do quarterly returns so for me it was vital to be able to test it. Columbus has developed an automated solution, which offers SMEs peace of mind by easily being able to make, preserve and then submit existing VAT records electronically, no matter what version of Microsoft Dynamics they are operating in.
2. What are the top three concerns of finance teams in SMEs?
I think the biggest concern of any finance team is getting things right the first time! The beginning of any task can be slightly daunting, but you only get better with practice and support. The second most frequent concern from my perspective would be related to meeting the needs of customers accounting process and making it easier to send invoices that won’t be queried! It usually has an impact on Cashflow, even though we state queries must be raised before the due date, they never are!
By far one of my biggest concerns is in regards to real visibility: if half of your data is on spreadsheets, you don’t easily know what is actually on! My advice to all SMEs is making sure there are streamlining processes.
3. How does your accounting software meet your needs as an SME?
One of the most important considerations for an SME is whether your software is up-to-date and on a supported version. Your software company need to have a proactive approach, as well as the partners you are collaborating with. I strongly feel that this is now more important than it was 10 years ago, as accounting needs are more driven through the software. Having said all this, accounting staff still love their spreadsheets, but this is only due to reporting still being a point of struggle. I also think that if you are working with the right partner, your finance journey can be pleasant!
4. Do you worry about further compliance from HMRC?
Not for now, especially after working with Columbus’s custom "digital tax ready" portal, which enables us to submit everything electronically as it’s straight-forward and easily accessible.
5. Do you have a preference between cloud or on-premise, and if so, why?
2019 can be unpredictable so I tend to recommend both, as long as the performance is great. Perpetual pricing is excellent as you can capitalise on that, but this mostly depends on your finances. If you’re cash-rich, buy the licence! If cash flow is bumpy, then a subscription could be better.
6. What three processes take up most of your time?
Month-end VAT reporting was one of the processes that would make my job difficult, but with the new HMRC’s Making Tax Digital for VAT, I see it as a blessing now. The second most time-consuming process is getting customers to pay on time! Cash flow is very important, especially when dealing with an international customer, as we are perceived as debt collectors, we just pay the one who shouts the loudest. The knock-on effect of this is that I am sometimes unable to pay my suppliers if my customers haven't paid me. I have encountered situations where a customer has apologised for not being able to pay, as they are waiting to be paid themselves.
Whether you are an existing Columbus customer or not, we can work with you to advise on the state of your current licence, version and maintenance plan, and the best route forward to achieve compliance for April 2019. If you are considering upgrade as an option, you do need to act now. The 6 months until April 2019 is not long in regards to planning, mobilising and implementing your upgrade.