The Complete VAT Jargon-Buster

EditorMaking Tax Digital

Value added tax (VAT) jargon can be confusing, leading to unnecessary complications for your business. The Complete VAT Jargon-Buster will allow you to confidently discuss your VAT and understand HMRC’s complex terminology.

We have written the VAT jargon alphabetically so that you can easily find what you need and dip in and out as required.

VAT Jargon A-Z

Some of the common VAT terms, written in plain English (you’re welcome):

Accounting Period – you usually submit a VAT return to HMRC every 3 months, this period is known as your ‘accounting period’.

Acquisitions – goods or services from overseas that you may have bought or acquired.

Corporate Body – a group of people, for example, a limited company, private company or limited liability partnership, being treated as one group by law.

Distance Sales – when a business supplies and delivers goods from one EU country to another.

Exempt Supply – supply of goods or services is an ‘exempt supply’ if no VAT is due by law.

Export – if you sell, supply or transfer goods out of the UK, this is known as exporting.

Dispatches – if you supply goods to another EU country, these are known as despatches.

Imports – if you buy or transfer goods into a country, this is known as importing.

Input Tax – the VAT added to the price when you purchased goods or services that are liable for VAT.

Output Tax – the VAT you charge on your own goods and services to businesses and customers.

Outside the Scope of VAT – goods and services completely outside the scope of VAT altogether, for example, goods or services you bought and used outside of the EU.

Place of Supply – the place where you make a supply of goods or services.

Reduced (VAT) Rate – some essential goods and services are subject to VAT at a reduced rate of 5%, for example, sanitary products or a child’s car seat.

Standard (VAT) Rate – taxable supply subject to the default rate, currently 20%.

Supply – supplying/providing goods or services, usually for sale.

Supply of Goods – a transfer of goods or services by sale.

Taxable Person – a business, sole trader or professional who are required to be VAT registered.

Taxable Supplies – any supply of goods or services by a taxable person, liable for VAT at the standard, reduced or zero rate.

Taxable Turnover – the total value (net of VAT) of taxable supplies made by a person during the year.

Tax Point, or Time of Supply – the date at which VAT becomes chargeable on a transaction (usually when goods change hands during the sale).

Partial Exempt – a VAT registered business falls within the scope of ‘partial exemption’ when it has goods or services of both a taxable and exempt nature.

Zero (VAT) Rate – as the name suggests; goods and services that are subject to a zero (0%) VAT rate, for example, most food and children’s clothing.

M2M Technology is one of the most established and experienced Sage Business Partners in the UK, working with Sage software solutions for over 25 years. We specialise in providing business management solutions that are practical, cost-effective and support your business growth.

To discuss your business needs with one of the team, please get in touch.

To access HMRC’s VAT returns guidance, please click here.

5 Ways Accountants Can Use Software to Grow their Accountancy Practice

EditorM2M

 

Technology can be the difference between a good and a great business. But in order to succeed and unlock its full potential, you need to be able to decipher each of its technological features, and how best you can implement them into your business operations.

After all, running the likes of an accountancy practice is by no means easy. It is far more than simply a service, it’s the overseeing of a whole enterprise, and one in which maximum productivity and growth is rapidly sought. So, how can it best be implemented within an accountancy practice?

Here we uncover 5 ways today’s technology can be adapted to your business, helping you to grow your practice faster…

  1. Automate your everyday tasks

Automation is by no means a new concept, yet frequent revisions to accountancy software, for instance Sage, means that the tools on offer today within an accountancy practice can be transformative within a business. In fact, they can speed up manual tasks by up to five times, making bookkeeping automated and effortless.

The advantages of such automation mean that not only do they eradicate labour-intensive processes, saving a practice significant levels of time, they can also empower accountants to take on additional clients, in a bid to grow.

  1. Use real-time accounting

Cloud technology is ideal for practices looking to develop their software business management with an agile system that can adapt to your changing business needs. A fully hosted solution, such as Sage, for your business is an ideal choice for accountancy practices.

Such flexibility and real-time functionality enable accountants to give their clients anytime, anywhere access to data within just a few clicks. By offering customers a method to access their data simply and quickly, accountants can spend more time building relationships with existing clients and finding new prospects.

  1. Be active and contactable on all platforms

In order to promote your business, accountants need to be accessible. By offering your existing clientele, and prospective ones, several contactable avenues, your clients can contact you whenever they need to. This can help to build trust and ensure that your services are recommended to others.

In this digital age however, your presence also needs to be seen on the likes of video calls, social media, and messaging apps in addition to more traditional face-to-face meetings, phone calls, and email. Also, it’s likely that the preferred contact for some clients will vary from that of others, so offering a good selection of availability over a variety of platforms is recommended.

The chosen form of contact needn’t be direct, for instance, the likes of Facebook and Instagram, enable non-direct communication with patrons, i.e. engaging posts that clients will find useful, from highlighting the services you offer or shedding light on ways to handle common bookkeeping challenges.

Posting thought-provoking content can help you to build a stronger online presence, while ensuring clients consider you to be a friendly and approachable brand.

  1. Adapt your services to suit millennials

There are many ways in which to adapt services to attract millennial clients. And given that millennials make up 35% of the workforce (according to a report by KPMG), accountants wishing to grow their accounting business can benefit greatly by building strong relationships with their millennial clients. So, how best should you adapt your services to better suit millennial clients?

Going paperless is a great place to start, just as embracing social media is. But what else can be done? How about subscription pricing? Subscription pricing is something millennials have grown up with. The likes of Amazon Prime and Netflix are growing increasingly popular, with a low monthly rate that makes it a more affordable option to millennials (as opposed to a larger one-off fee).

And the same concept is now being applied to many other services, including that of accounting services. Millennial business owners are choosing to gain their accounting services through monthly subscription payments, so being sure that your practice offers different methods of payments, including an option to pay via monthly subscription, could stand your business in good stead.

  1. Support the transition to mobile

Just as cloud computing provides the flexibility to work from anywhere, an app is too an advantageous tool for both accountants and their clients.

Smart phones are no longer used simply for making calls, taking the odd selfie, or posting on social media. Instead, they are being used to manage the likes of household utilities, banking, and budgeting.

Apps make this possible, and for those of us on-the-go (which is most of us), they simply can’t be beaten. So, why should your accounting be any different? The Sage accounting app helps to make life easier by giving users the functionality to manage their invoices and expenses on the go.

By encouraging clients to utilise apps, such as the Sage app, your patrons can make use of them wherever they are, so if they wish to send receipts, bills, or other paperwork to accountants via apps in real-time, they can.

The benefits for the accountant are also well-defined as fast, real-time access via apps means your job is made easier, while also being able to process items as they come in, and therefore providing clients with an outstanding service.

Looking for Software to Grow your Accountancy Practice?

If you’re an accountant looking to make better use of technology with software that will not only helps you to grow your practice but also brings additional benefits to your clients, M2M are here to help. Whether you’re looking for Cloud hosting, software support, or further information on the Sage software we offer, please get in touch

 

How to Switch to Making Tax Digital In your Business

EditorM2M, Making Tax Digital

 

We have spoken about Making Tax Digital on a few occasions now, and without wanting to prattle on, the M2M team hope that by revisiting the subject, we are, if nothing else, demonstrating the importance of the topic, particularly with implementation soon to take place.

In April this year, businesses will start to be required to keep their records digitally and send their 9 box VAT return data to HMRC. Sounds straightforward right? But there’s a few things you’ll want to consider first…

To help simplify your considerations, Sage has put together a Business checklist – a 4 step process – which is as follows:

1. Determine whether you’re impacted by the change
2. Review your plan
3. Start reviewing your VAT process
4. Adopt early

Let’s explain this in more detail…

Step 1: Determine whether you’re impacted by the change

Any business that is above the VAT threshold (of 85k+) is most likely already utilising some form of software or spreadsheet.

By understanding how much of what you are doing already is MTD compliant, you’re halfway there, as this will help to indicate if there is anything extra you need to do.

For people using software for VAT, a lot of the software is enabled already to translate into the 9 boxes of VAT return data, so for businesses that are using their package in that way, they will no-tice very little change or impact.

For those who’ve got a mixed approach or manual approach to record keeping however, they will be more affected by the change, as they will require a digital system to replace the manual one.

Step 2: Review your plan

If you’ve got an accountant, now is the time to talk to them. And if you’re using software, and you’ve got a supportive software package, now is a good time to talk to your software provider – doing so will help to bring you clarity. You’ll want to know when their software will be enabled for MTD, and when to join the pilot. With only a few months to wait until MTD implementation, the answer will likely be now.

For businesses that are using spreadsheets, and manually completing their VAT, there are provid-ers that are offering bridging software, bridging the gap between manual and digital, so this is po-tentially an option to help assist in your transition to MTD.

If you’re a new business or an accountant who’s got new clients joining, it’s advised that you whol-ly undertake a digital approach, rather than opting for a manual one. This is because, digital will soon be obligatory so you’re effectively complying from the get-go, but also because, by taking on software that recognises MTD, you’ll benefit from a much fuller service. For example, Sage soft-ware helps to eradicate common errors made when using a manual approach, it also offers advise such as managing credits and debtors, creating invoices etc.

Step 3: Start reviewing your VAT process

Work with your partners or accountants – and don’t hesitate to get support from your software provider if you will be downloading accountancy software for the first time.

Outline the processes you may need to change:

• Are you submitting through HMRC’s online gateway? Are you using Excel or paper?
• Will your current methods/software allow you to submit through the gateway once MTD comes into effect?
• Do you have any adjustments to make before April?

Step 4: Adopt early

The faster you get started, the more likely you are to fulfil your new MTD obligations seamlessly come April 2019. Give yourself the time to adapt and get the support you need to make the impact as minimal to your business as possible.

The VAT Mandated Service WILL Have A Soft Landing

Just remember, HMRC won’t penalise people for getting things wrong for the first year, that gives you a year to get used to the new digital VAT service. And for those joining the pilot service, this provides you with additional time to get used to it. This means, HMRC won’t penalise people for not keeping their records digitally, and not sending their data in the agreed API format.

Don’t Spend Another Year Getting Ready…

As step 4 suggests, the key is to adopt MTD early. Despite HMRC not penalising businesses who haven’t adopted the digital approach within the first year, this shouldn’t mean that businesses spend another year getting ready.

So, what happens next? If you are a current Sage customer and would like to be a part of the pilot, find out more here.

Or for more information on MTD, why not watch the video we’ve featured below, which explains the rules for Making Tax Digital for VAT in more detail…

10 Making Tax Digital for VAT Questions Answered

EditorM2M, Making Tax Digital

 

We spoke about Making Tax Digital back in September, yet with so many common misconceptions regarding MTD still circulating, and with less than 6 months till the VAT changes come into play, we thought now would be a good opportunity to answer some of the most commonly asked questions by businesses to help keep you abreast of the 2019 MTD initiative.

By now, you’re likely to already know the basic facts, such as;

  • When MTD is due to be implemented – 1st April 2019
  • How MTD will affect your business – customers will be unable to submit a return manually via HMRC gateway and instead will need to do so via their accounting software
  • How to remain compliant with the new changes – customers will need to upgrade to Sage 200cloud Spring 2018 release or a subsequent release in order to remain compliant

But what about the other, trickier questions that businesses are asking? From 1st April 2019, given that all businesses with a taxable turnover above the VAT threshold (currently £85,000) will be required by law to store financial records digitally and submit VAT returns from MTD-compatible accounting software, we’ve put together 10 Q&As commonly asked by businesses up and down the country, we hope you find the answers useful;

  1. What’s happen if you don’t have Sage 200cloud Spring 2018 release?

Not all customers will be in a position to upgrade to Sage 200cloud Spring 2018 before April 2019, therefore Sage have created a new MTD Submission module to provide customers on previous versions the ability to comply with the mandate without upgrading in the short term. This is only a temporary fix, so a full upgrade is still advised.

  1. In clause 2 .1.1 HMRC states that there will be a soft landing period where businesses will not be required to have links between software programs. So, why would a customer require the MTD Submission module?

Customers don’t need to have a digital link between the software and their VAT return in the first year, but they will still need to keep digital records and submit digitally.

Customers who want to do it this way will still need to invest in a submission tool (bridging software) that will send the data, make sure they trust it is going to be compliant, then in a year, they will need to start using a solution which has digital links.

Customers will benefit from not having to switch software providers in 12 months time if they use the MTD submission module.

  1. Sage customers on 2015-17 are on supported platforms and the EOL policy states they will get legislation updates as part of their services. Why should they pay for this?

Legislatives updates started in the summer 2018 release and will continue to be provided, giving Sage customers 4 versions of Sage 200cloud that will be MTD compliant by April 2019.

Using the latest software is the best way for Sage to help customers run their business effectively, however for those customers who are unable to adopt one of these versions, the MTD submission module enables them to remain compliant.

  1. Does the module support group VAT submissions?

The MTD module offers new functionality and capabilities that are currently not available in Sage 200cloud, so yes, the module will support group VAT and/or multi-company submissions. For example, if a customer upgrades to the latest version of 200cloud, they will still require the module as the product mainly supports single company submissions. In this instance the module will be available at no extra cost.

  1. How long can customers use the submission module for?

The module will be sold to you on an annual subscription. If at the point of renewal, you haven’t upgraded to a compatible version of 200cloud, the subscription will automatically renew.

  1. What if a customer chooses not to buy the module from Sage?

There are 2 options;

  • Upgrade to the latest version,
  • Buy the submission module

Therefore, if neither option is selected, we will assume that you have chosen an alternative unsupported solution from a third party.

  1. How straightforward is a Sage 200 upgrade to the latest compliant version?

Your business partner can advise and assist with the upgrade process. The complexity of the upgrade will depend on many factors:

  • Hardware and infrastructure compatibilities (which may require new servers and/or Microsoft Software),
  • Bespoke and 3rd party add-ons upgrades,
  • PC/Workstation spec,
  • Training and data migration
  1. When is the MTD software required by?

The MTD software will be required from April 1st 2019 however this will depend on your VAT Periods. e.g. If your VAT quarters runs from 1st February to 30th April, you will need the MTD in place for 1st May, which is the start of next VAT Period following the introduction of MTD).

  1. Will there be any training on the new module?

Yes. When a customer buys the MTD submission module they will receive a free eLearning course (£200 value), delivered via Sage University. There is also a demo available on AskSage article, 41667. This can be found here.

  1. How does the customer obtain the MTD module for non-compliant versions of Sage 200

This needs to be ordered via your business partner.

For Further information, M2M Can Help…

So, what happens next? For customers looking to buy the latest module, our friendly team at M2M can help by processing your order with Sage. We can also advise and assist with your Sage 200 upgrade, and for those with non-compliant versions of Sage 200, we can order the MTD module on your behalf.

For further information on MTD, why not take a look at VAT Notice 700/22, which explains the rules for Making Tax Digital for VAT in more detail, or please feel free to contact us.

6 Reasons Why SaaS Is A Good Business Alternative to Traditional On-Premise Software

EditorM2M

 

Software as a Service, also known as SaaS, is a software licensing and delivery model. When compared with traditional models of business software installation, SaaS offers many advantages. For example, SaaS – and more widely cloud computing – can help you make the most of a limited IT budget while giving you access to the latest technology and professional support.

Examples of SaaS Use within a Business Include:
  • Accounting and invoicing
  • Tracking sales
  • Planning
  • Performance monitoring
  • Communications (including webmail and messaging)
6 Reasons Why SaaS Is A Good Alternative to On-Premise Software
  1. Reduced IT Spend

Because SaaS is often subscription-based and has no up-front licence fees, initial costs are much lower.

Your SaaS provider will manage the IT infrastructure that is running the software, which also brings down fees for the likes of hardware and software maintenance.

  1. Fast Install and Operation

Because SaaS is installed and configured in the cloud already, delays often associated with traditional software deployment can be kept to a minimum.

  1. Stress-free Upgrades

Your SaaS providers will handle all hardware and software updates on your behalf, deploying upgrades centrally to the hosted applications and removing this workload from your shoulders.

  1. Increasing Flexibility

SaaS providers generally offer countless subscription options and the desired scalability to alter subscriptions accordingly as and when needed, e.g. when more users need to access the service, or when your business expands.

  1. Heightened Convenience

SaaS is an accessible and convenient alternative to traditional business software installation, as all you need to access a SaaS application is a browser and an internet connection. It’s also available on a wide range of devices and from anywhere in the world.

  1. Boost Productivity

Using the SaaS Salesforce platform, you can build a bespoke business system that spans across your front of house to back office systems, providing access to crucial information simply and easily. For example, Salesforce products like Sage Business Cloud Financials can help you to analyse cashflow and undertake key accounting tasks wherever you may be.

What Is Sage Business Cloud Financials?

As mentioned above, SaaS product; Sage Business Cloud Financials is a popular and frequently implemented business tool. As a cloud-based package, it offers a completely agile business solution, ideal for managing all your business processes in one place. For example, you can link your sales, accounting, banking, invoicing, and payments.

With Sage Business Cloud Financials, you’re able to connect your back-office key financial data with your front office sales CRM system to provide your employees with better insight, allowing your team to work smarter, be more agile and increase business growth.

Find out more about Sales Business Cloud Financials in this video:

Sales Business Cloud Financials Advantages
  • Manage Projects
  • Maximise Team Productivity
  • Evaluate Profitability
  • Simplify Complex Customer Billing
  • Create and Accept Invoices
  • Flexible Subscription Management
  • A Complete View of your Accounts
  • Gain Immediate Visibility into KPIs
  • Build Dynamic Financial Reports
  • Access 100% Functionality on Mobile
  • Simple and Intuitive for Rapid Deployment
How M2M Can Help…

At M2M, we are now accredited to sell and implement Sage Financials, where we can tailor your system to meet the individual needs of your business. M2M understand that each business is unique and the support needs that you have may differ, depending on how you use the system.

Our customer support packages are priced on an individual basis and reflect the level of support you need as you need it. To arrange a Sage Business Cloud Financials demonstration or for more information, contact us here or on 01245 49 48 47.

How to Conquer Bad Debt Once And For All

EditorCredit Hound, M2M

 

Credit control is an essential part of your business, it helps you to effectively manage your cash flow, avoid late payments and prevent bad debts. Think of it as a system used by well-managed businesses to ensure that credit is only given to customers who can pay and pay on time.

And yet, good credit control requires specialist skills combined with the correct systems and processes. It’s not simply a case of collecting funds from non-paying or late paying clients. Credit control is based on building relationships with your customers and creating a rapport with them.

For example, understanding your customer’s processes and approval systems when it comes to invoicing can prove extremely beneficial, helping to reduce invoice errors, the need to re-submit invoices, and lessening the wait-time between payments.

Getting Paid On Time… What’s the Hold Up?

Handling late payments has to be one of the more infuriating elements of running a business. And with so many companies being vulnerable to late payment due to the imbalance between their receipts and outgoing payments, what’s stopping businesses from chasing their customers for the money they’re owed?

Well, many SMEs find it difficult to raise the late payments issue and be firm with their customers because doing so could jeopardise future relationships. In addition, they simply don’t have the right resources or processes to chase late payments. So, how can you ensure you get paid on time, every time?

How to Conquer Bad Debt Once and For All

Rather than having to convince late paying clients to settle their invoice, it’s far more productive to prevent them from occurring in the first place. Having the right tools in place can assist with this, and enable you to use automation instead of verbally chasing your customers.

To help conquer bad debt once and for all, we recommend using Credit Hound. This advanced credit control software gives you the tools to work more proactively, improve cash flow and get paid faster.

Integrating with your ERP system, Credit Hound shows you where your money is and who you need to chase. With all the information you need on screen to help you chase payments, you can record notes and set to-do tasks to chase late payments.

The software also helps to save time carrying out repetitive tasks by enabling you to set up rules and actions to automatically send chase letters, put accounts on stop and schedule phone calls. Whilst dispute handling features help you keep track of disputed invoices and its comprehensive reporting system gives you a clear overview of your debtor situation.

Credit Hound Features:
  • Dashboard view; see who owes money, how much, promised cash & disputed payments
  • Pre-emptive reminders; help to encourage prompt payment
  • Automated rules and actions; allows you to automate repetitive tasks
  • Interactive aged debtor list; sort and filter in real-time, no more manual check-lists
  • Chase screen; see information during calls and record notes
  • To-Do List; keep on top of your chasing calls
  • Reporting; range of reports available to assess your efforts and highlight debtor issues
  • Consolidated chasing; chase and report at branch or head office level
  • Dispute management; tracks and records disputes
  • ERP integration; seamless integration, so no re-keying data or manual admin
  • Quick return on investment; more available cash for your business
Get Paid Faster with Advanced Credit Control

If you need to get paid faster, M2M can help. We’re happy to discuss your credit control options and to help answer any questions you may have regarding advanced credit control software; Credit Hound. Contact us on 01245 49 48 47 to find out more.