Making tax digital (MTD) for barristers
The first stage of the Government’s Making Tax Digital (MTD) campaign came into force on 1 April 2019 with the introduction of MTD for VAT. This will affect how barristers make their tax submissions to HMRC.
Organisations or individuals that currently file a compulsory VAT return and have a taxable turnover above the current VAT registration threshold of £85,000 must now file VAT returns digitally.
Under the new rules, barristers with a turnover above the threshold – regardless of legal structure e.g. sole trader or company – must keep their accounting records digitally and make quarterly VAT returns to HMRC using MTD for VAT ‘functional compatible software’.
For those who do not file in the right way at the right time, HMRC will enforce penalties, so it is important to ensure you are ready.
VAT returns? must be submitted one month after the end of each quarter. For most, the first will be due at the end of July 2019 but will depend on the VAT date stagger you have:
1 April to 30 June 2019 due to be filed by 31 July 2019
1 May to 31 July 2019 due to be filed by 31 August 2019
1 June to 31 August 2019 due to be filed by 30 September 2019
Quarterly submissions need to be based on accurate accounting data that is held digitally. Submissions can be directly from suitable accounting software, bridging software or API-enabled spreadsheets.
Moving your accounts to a cloud-based accounting software offers the simplest way to meet the new filing rules – for this we recommend Xero cloud accounting software.
Xero can be purchased through us as your accountant, or directly from Xero:
For those managing their own finances we can offer training and support. We hold regular Xero demos for those new to the software or for those ready to get started training and support charged from £65 per hour.
Whilst we specialise in Xero, we are also experienced in operating other software systems of our clients’ choice. This means we can continue to support you if you chose to use another accounting software.
Benefits of Xero for barristers
As well as ensuring you’re are ready for Making Tax Digital, Xero offers several other benefits to help streamline your day-to-day finances, including:
- Access to critical data anytime, anywhere
- Recording of chamber income and receipts
- Simple tracking of time, fees and client billing
- A closer eye on your tax affairs
- The ability to remotely share accounting information with your accountant
- A single place to keep track of the health of your finances
If you plan to use Xero, we recommend allowing plenty of time before your next filing deadline to get set up and connect your account to HMRC’s MTD for VAT portal.
For more information on complying with MTD for VAT or getting set up on Xero, contact Jane Spraggs or your usual WMT advisor.