Making Tax Digital

September 11, 2023

While some of your may be relieved to have learnt that the digitisation of Income Tax and Self Assessment has been delayed until April 2026 at the earliest, it’s worth starting to look at things at this stage.

The good news is that it’s not as hard as you might think for SMEs (one less thing to worry about). I did it myself last night using QuickFile and whilst I admit that my system is relatively simple (all payments go into the bank account), it took me less than 2 hours to prepare a Profit and Loss account for my last tax year and I was watching Wales play Fiji at the same time in the Rugby World Cup (for those who didn’t watch the game, it was quite nail biting at times!).

The best part was finding out that QF is free providing your 12 months nominal ledger count remains under 1,000. The bonus is it allows you to connect your bank account and can import about 6 months historically with the press of a button. If you need to import previous months, then you will have to create files from your bank’s online portal and then upload them, but this is something that takes minutes once you learn where to go on your bank’s website to to request the historic data.

QF also allows you to create invoices so it’s seems quite a sophisticated system, but as I don’t invoice, I have not used it. I presume it will be like other similar accounting systems in that it will be able to check when payment is made and allow you to create a list of outstanding payments to follow up.

Creating your QF account requires you to input your Companies House registration, so it already knows when you need to submit your annual return. You will get an email to remind you.

The most challenging part for me was creating tags for the old payments in/out on the statements, but this is all prompted via a drop down menu. What you’re essentially doing is telling the software what the debits/credits were for, so that it can prepare the end of year information.

I actually surprised myself as to how easy it was. Once you have done your profit and loss statement, you can refer the data to a number of accountants who can submit the information on your behalf; the prices were much less than I have seen quoted by high street firms. Equally, once you have your online Companies House and Tax log in codes, you can do this yourself, again much easier than it sounds, especially for micro companies.

Clearly if your business turnover requires you to have audited accounts, then you will have to get a qualified person to do this. Do allow them enough time, especially if you have a conventional year end such as 5th April or 31st December. They do tend to get quite busy around those dates!

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