Sage UK and Ireland content manager Stacey McIntosh explains how going digital will help retailers become more efficient when dealing with tax returns and record keeping.
Tax can be a challenge for retailers, but the UK Government is seeking to change that.
Its new programme, Making Tax Digital, aims to create an efficient digital system.
It begins in April with Making Tax Digital for VAT. Nearly every VAT-registered UK business with a taxable turnover above the VAT threshold – currently £85,000 – will need to file returns digitally using functional compatible software.
Income tax, corporation tax and self-assessment tax will all be introduced in the future.
Save time on admin
According to HMRC, inaccurate tax submissions result in £9bn worth of tax being lost each year.
Meanwhile, Sage research revealed that UK small and medium businesses lost £30.8bn in resources between January and October 2018 due to time spent working on unnecessary admin tasks.
HMRC is aware of the scale of the problem and knows that businesses want to get their tax payments correct.
And this is where Making Tax Digital comes in.
We support the simplification of the tax system as it will increase productivity and help retailers spend less time managing admin.
Does this apply to you?
First, check whether Making Tax Digital for VAT applies to your retail business.
HMRC has a series of deferred and exempt categories, so see if you fall into one of these.
If it does apply – from April or the deferred date of October 2019 – review the processes required for your business to generate VAT returns. Then work out when your business will move to Making Tax Digital and put a plan into action.
Retailers need to keep detailed records of their sales income.
If you’re currently recording daily totals, you can continue to do this if you’re on a retail accounting scheme. You’ll have to keep a digital record of your daily gross takings.
However, it won’t be necessary to keep digital records of every single business transaction.
By using accounting software, submitting tax returns can be done quickly.
In fact, digital accounting can support savings of £17,000 per year, according to research from Sage.
Get started now
Retailers shouldn’t wait until April 2019 to prepare for Making Tax Digital – it’s best to start now.
Businesses should inform their staff about these changes and speak to specialists and accountants now so that they are ready.
At Sage, we’ve been helping businesses with legislation and compliance for more than 35 years. We can support retailers with their preparations.
Stacey McIntosh is UK and Ireland content manager for Sage
Download the Sage Making Tax Digital guide today.