I am sure you are totally fed up with MTD being spouted by accountants & HMRC and I don’t blame you.  There are probably some out there believing it is just HMRCs way of having big brother checking more of your business. 

That may be true to a point, but the reality is that if you manually plug your VAT figures into the government gateway, you risk the chance of making an error.  And this is as likely to cost you cash as it is to save you cash.    This is not about catching people who deliberately evade paying their VAT, but about helping those who find numbers difficult – and there are plenty of people that do struggle. 

Now manually plugging your figures into the Government Gateway is a thing of the past – you have to use software to upload your data, but the point is, you don’t want to be making a yucky job any worse than it needs to be.

Historically, I have had clients that kept records and prepared their VAT either in a manual cashbook or on spreadsheets and they made mistakes.  When these mistakes are discovered, it was a manual effort to rectify those mistakes, usually requiring notes to be made so that:

  1.  You remember to make the adjustment on the next VAT return;
  2. So that in the event you get a VAT inspection, you have a note of what you did and why.

By using MTD compliant software, you will minimise the chances of mistakes and when you do make them, you (or your advisor) make the change in the software and the VAT will automatically sort itself out, – no need for a long memory or copious notes.   Without exception, my clients much prefer the software that I now encourage them to use, compared with spreadsheets.

More importantly though, MTD compliant software is actually a much better business tool, than spreadsheets or manual cashbooks.  You can easily see who owes you what, how much money you have in the bank, what you owe to whom and what profit or loss you have made over any period of time you choose to look at.  You can also monitor your results against budgets and with your advisor’s help, predict where your cashflow is likely to be at any point in time. 

It has been estimated that over a period of 5 years, businesses could gain £57bn because of the extra productivity automating record keeping can bring. 

Although there are a million small businesses that file under MTD. Many more business are burying their heads in the sand, believing that either they are below HMRCs threshold so they don’t need to worry about it (if you are VAT registered the rules are changing) or they are unaware of MTD for Income tax due to come in in 2023, followed by MTD for Corporation Tax a while after that.

If you are one of those, I urge you to stop being an ostrich and embrace MTD. You cannot avoid it, so use it to your advantage.  Make the data work for you. You will find that with all of the tools available you will spend less time recording information  for which there is no benefit, but you can spend more time analysing the results which are available as soon as the data is recorded, meaning you can make business decisions based on accurate information and identify problems much more quickly. And you never know, you might find that your mistakes have cost you cash in the past and suddenly you find your cashflow improves.

We are proud to say that we were one of the first firms of accountants to embrace Cloud Accounting in the UK.  We are great believers in embracing technology so that our business and that of our clients’ works more efficiently and effectively.  We won the Wales FSB Digital Innovation award, which recognises the efforts put into embracing all things technological, making us one of the more advanced small firms of accountants and business advisors in the country.