HMRC’s Making Tax Digital (MTD) initiative is the biggest change to VAT in decades and with less than 5 months until the 1 April 2019 deadline, it’s essential that every holiday park business is fully prepared.
Currently, any VAT registered holiday park has a responsibility to provide information to HMRC by completing a VAT return. This is processed by accessing the HMRC VAT gateway and entering the required information, either directly with HMRC or through an Application Programming Interface (API) via accounting software, such as Xero.
For those holiday parks that submit direct to HMRC, many still use manual systems to record their accounting information, use spreadsheets such as Microsoft Excel or do not fully utilise their accounting software .
On the 1st April 2019 this changes for all VAT registered businesses with turnover exceeding the current VAT registration threshold of £85,000. After this date, for those businesses within the scope, the current HMRC portal will be closed and VAT returns will only be able to be submitted via an API.
Once MTD is mandatory, businesses will no longer be able to keep manual records. Digital records must be maintained in what is defined as ‘functional compatible software’ – broadly a system which can connect to HMRC via an API. These required records are as follows:-
MTD will, for many holiday parks, necessitate the implementation of new software and systems. This can seem daunting but changing accounting systems can bring efficiencies and revolutionise the business.
The starting point for implementing any new system should be working out what you want to achieve. Is it just about becoming MTD compliant or are there other benefits that can be derived from the new system? This is your opportunity to redefine how you work from the ground up. Consider the reporting tools that could help you manage your park more effectively and remember that any system should have the flexibility to adapt as your business grows and develops.
Make sure that your employees are committed to what you are trying to achieve. I have seen countless situations where a business owner has a clear plan, only to have it undermined by employees or bookkeepers resistant to the new systems. Remember that people are naturally resistant to change but if they can understand and buy into the change the chances of success are exponentially greater. Find a key employee that can act as a ‘champion of change’ and act as an example to others.
Timing is everything. It can be tempting to plough straight ahead but, waiting until your accounting year end or VAT quarter end may be preferable. Picking a time during the off-season will also give you the time to devote to the development of new processes
Also, with many holiday parks having customised and bespoke software providing solutions for the management of the park and the booking systems, a harmonious integration between accounting and management systems can bring real efficiencies to a business through automation.
The three ways to integrate your systems with accounting software like Xero are:
There are currently hundreds of apps being developed from Optical Character Recognition (OCR) software to debt chasing software. Choosing the right app for the park, which integrates with the accounting software seamlessly will save many hours of manual inputting and will standardise entries.
The digital age for accounting is well and truly here and MTD for VAT is not the end of the story. Other taxes are to follow the MTD route in due course and by adopting and implementing new systems in a timely and controlled manner you will ensure your park is prepared for the future.