From 1st April 2022, the Making Tax Digital (MTD) initiative will be extended by HMRC to include VAT-registered businesses below the current £85,000 turnover threshold who were previously exempt from this scheme. Farmplan, the UK’s leading agricultural software specialist
s, is encouraging all farms to check that they have MTD compatible systems in place to ensure that they are adhering to these rules.
The MTD regulations require businesses to keep digital records of all transactions that make up the figures reported in their VAT return. If more than one system is used, these need to be linked digitally and kept using an approved computerised method. The regulations will apply to all businesses that conduct VAT submissions, whatever their turnover – those that do not comply will be at risk of facing penalties.
“Many businesses making the switch to MTD are worried about the learning curve,” says Anne Cianchi, Product Manager at Farmplan. “There’s no need to worry in that regard. This is a tried-and-tested process that many of our customers have already made. In fact, we’ve found that once reluctant adopters make the change, not only are they surprised by how easy the transition is, but also by how many hidden benefits are suddenly available to them. From improved efficiencies to easier business performance analysis, the switch to MTD software often transforms the financial management of the farm”
Although the deadline might feel imposing for some, Farmplan wants to emphasise that making the digital change is not as challenging as it may seem. With over three years of experience to draw on, being one of the very first software companies to be recognised by HMRC back in August 2018, they have seen a lot of businesses successfully make the move. To illustrate just how smooth the switch can be, Anne points to one of Farmplan’s customer case studies. H Snelson & Son Ltd became early adopters of Farmplan Business Cloud in order to comply with MTD regulations and easily transition to digital VAT.
“We wanted to get ahead of the game and ensure we were ready before the HMRC deadline,” says Andrew Nicholls of H Snelson & Son Ltd. “We have found it to be user-friendly, and we’re now working more proactively to simplify our farm accounts. For example, we can now easily put our invoices through the system rather than uploading them in bulk every quarter. This approach really takes the pressure off the team.”
For those already using compatible accounts software, the process is even easier. First the software must be linked to HMRC by following the simple instructions given. Then when your VAT return is ready, it just takes one click of the button to submit your figures to HMRC.
“For some farms, this MTD requirement might feel like it’s a big leap,” adds Anne. “However, it’s not as stressful or complicated as it can seem. By making use of the resources and the support available, the transition to MTD software will not only ensure compliance with the new rules, but will also bring so many other benefits at every level of your business.”