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5 top tips to keep on top of MTD for VAT

1st Jul 2022
Brought to you by
ANNA Money
ANNA (Absolutely No-Nonsense Admin) is a business current account and business admin app that helps...
Share this content

MTD is not going anywhere so the sooner clients get on board, the better. 

The common challenges with clients generally, can often be around managing change. If the transition through change for clients can be tackled with ease, it will have a domino effect with a positive impact onto an Accountant’s workload and business itself. 

 

Here are 5 top tips on how to make sure clients are organised, proactive and on board with MTD for VAT and beyond!

 

  1. Make sure they understand digitalisation and its benefits for them

Making Tax Digital is here and it won’t be going away. 

A key part of the government’s plan is to make tax processes and compliance simpler for clients to follow and get right. They’re driving to be the most digitally advanced tax administration in the world. With such a goal, you can imagine a lot of changes can be expected to the processes in the coming years. 

Having clients understand the intention and goals of HMRC will bring a foundational understanding to the changes that are being made. This in effect, can motivate them to utilize the new processes as best as possible for their own benefits in accuracy of tax compliance, but also the accountants, through better organization of business records and bookkeeping. 

Send them a guide to read such as ANNA’s guide on everything you need to know for Making Tax Digital. 

  1. Educate them on basics of VAT

The more a client understands the better. 

How well rehearsed are your clients in the basics of VAT? Do they understand why you are requesting certain information from them? 

Basics of VAT on the 9 boxes and how information is allocated to where, could really build a good foundation of tax understanding for the client. If they can understand tax better, they will be more compliant in providing the information and staying organised. 

Clients want to claim back as much VAT as possible. But, VAT incurred on a purchase of a taxable supply cannot be claimed without supporting evidence. Teach them these basics so they have a bigger drive to keep on top of business records.  

Send them information on expenses that are blocked from input tax. If they understand they can’t claim VAT back on certain supplies, it’ll naturally develop better business acumen. If they’re spending a lot on entertaining clients, fill them in on the VAT block on business entertainment. Maybe, they’ll swap the boujee overpriced bar to a reasonably priced local restaurant for their business meetings. Everyone wants to save money, right? 

  1. What can you do to be more efficient

Suggest the software packages that will help you help them.  

With software like ANNA, Accountants get total access to clients' transactions in real time: you can preview statements, request missing receipts or invoices and manually update automated expense categories. 

ANNA also offers integrations with Xero. You can choose to import only the bank feed into Xero, or to forward all the attachments and reconcile it automatically. Any custom Xero accounts can be mapped to ANNA categories using our dashboard. 

  1.  Importance of deadlines - go in on the repercussions!

A VAT return deadline is 1 month and 7 days after a VAT period ends. But this is too late for clients to use it as a deadline. A client rushing to get everything to their Accountant in time may seem reasonable to them as it’s before the deadline, but an Accountant has many other clients deadlines to consider also. 

Placing soft penalties or warnings on failure to meet deadlines will work in an Accountants favour. Their time and workload needs to be considered and respected. 

Ultimately, HMRC does not place the responsibility of late submissions or payments on Accountants. It is on the business owner. It is in their favour to work to deadlines and support their Accountants in doing so too, by cooperation. 

  1. MTD for VAT is only the beginning - the sooner they get organised the better for their futures taxes when it comes to MTD

We all know Making Tax Digital is the start of a long journey for the next few years when it comes to tax compliance and processes. 

Teach clients the benefits of implementing digital processes now, which will also benefit them later when MTD for ITSA comes into action and even MTD for Corporation tax! If they can understand the more digitized their develop other business processes to be now, the easier they will find business admin and tax later on, it can initiate proactivity - only making financial and tax processes easier to manage. 

 

Education is key here. 

The better the foundational understanding, the more clients will be willing to comply.