Salons and barbershops who pay VAT will have to change the way they do their VAT returns from April 2019.
New rules called ‘Making Tax Digital’ will require VAT-registered businesses to ‘go digital’. Find out what’s involved and get ahead of the curve.
This blog post covers:
- What is ‘Making Tax Digital’?
- Return deadlines
- What is MTD-compatible software?
- Where do I find MTD-compatible software?
- When do the rules start for me?
- What should my accountant do?
The government’s Making Tax Digital (MTD) rules will apply to your salon or barbershop from 1 April 2019 if you are above the VAT threshold (currently £85,000). MTD will also apply to businesses who use the VAT Flat Rate Scheme.
The new rules mean that you will have to:
• Keep digital (electronic) VAT records.
• File your VAT returns using MTD-compatible software.
Making Tax Digital does not require you to keep any additional records.
Our comprehensive ‘guide to the financial aspects of running a small business’ is available free to NHF Members.
The deadlines for sending VAT returns and making payments will not change, including monthly, quarterly and annual VAT returns.
You or your accountant may already store all your business and financial information in an electronic format.
However, under Making Tax Digital you must use software that can:
• Keep your VAT information in the digital format required by Making Tax Digital.
• Prepare your VAT return based on this information.
• Communicate with HMRC by sending and receiving files via its Application Programming Interface (API) platform.
The MTD software will ask you to confirm that your return is correct and that you want to submit it to HMRC. You will then receive confirmation that HMRC has received your return.
If you are above the VAT threshold it is advisable to move to MTD-compatible software as soon as possible.
HMRC is currently working with a wide range of software suppliers to develop suitable software.
You’ll need to check if your current software provider will be able to offer MTD-compatible software.
NHF Trade Member GoSimple Software Limited is on the approved list of MTD-compatible software suppliers.
You will also be able to find a supplier on the HMRC website.
Could you get a better deal by changing your business bank account? Find out more.
Making Tax Digital will apply to your VAT returns from your first VAT period on or after 1 April 2019. (Making Tax Digital will apply to other taxes after April 2020 at the earliest.)
If you already have an accountant or bookkeeper who sorts out your VAT returns for you, they can continue to do so under Making Tax Digital. However, they will need to:
• Use MTD-compatible software.
• Sign up to a new ‘HMRC agent services account’ so they can use Making Tax Digital services on your behalf.
Not sure which accountancy services you need? Find out what’s on offer to NHF Members and how to go about choosing an accountant.
• If you pay VAT, you must go digital from April next year.
• You’ll need to use MTD-compatible software.
• Your bookkeeper or accountant can still do your VAT returns but must use the correct software.
• MTD-compatible software is currently being developed. (NHF Trade Member GoSimple Software Limited is on the approved list of MTD-compatible software suppliers.)
More from the NHF
Bookmark our website to make sure you’re up to date with all the latest news, views, information and advice relating to the hair, beauty and barbering industry.
• Starting up
• Salon software
Read more of our brilliant blog posts to gain expert business insights into key hair, beauty and barbering issues.
You may also be interested in
Data protection laws got tougher when GDPR came into force on 25 May 2018. Your hair/beauty salon or barbershop must understand and comply with additional data protection laws as set out in GDPR. NHF Members can download our free in-depth guide and templates. Find out more.