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awareness had actually dropped from
2017 to 2018, probably because of the
delays. Only 15% knew about MTD.
All this is probably because HMRC have
been poor at communicating MTD. And
with several deadlines already slipped,
the accountants that do know about it are
loathed to tell their clients until they are
100% sure of no further slippage.
THE IMPACT ON LOCKSMITHS
Despite the likely slow start in
enforcement, all self-employed and
business-owning locksmiths will
eventually have to comply with fines and
the big stick.
There has been a lot of discussion,
particularly among accountants, of how
compliance can be achieved. As a result of
pressure from the accounting profession,
HMRC has changed some of the guidance,
particularly in relation to spreadsheets.
The bottom line for locksmithss is that
records of sales and purchases must be
kept in electronic form from April 2019 for
those turning over more than £85,000 and
from April 2020 for those turning over more
than £10,000. VAT returns and quarterly
profit and loss statements must be derived
directly from these electronic records and
submitted electronically to HMRC.
HOW TO COMPLY
There are three ways locksmiths can
comply:
• Send information regularly to their
accountant who acts as their agent
and records the information in their
accounting system and performs the
submission to HMRC.
• Record all sales and purchases in a
spreadsheet where the VAT return is
calculated and submit these totals
via ‘bridging software’ to HMRC. Use
the same method for profit and loss
returns in 2020. There is a rumour
that this method will only be allowed
for 12 months.
• Run a system of their choosing to
generate and capture sales and
supplier invoices and submit
electronically to HMRC from there.
MOVING TO DIGITAL
Already 98% of VAT returns are
submitted through the internet either
directly by the business or by their
accountant. However currently only 8%
of VAT registered businesses use their
own accounting software to file their VAT
returns.
There are some reasons why moving
to a digital platform can be good for
locksmiths:
• If all information is generated from
a system, many things like quotes
and invoices can be done faster
and numbers are always up to date.
That should save time, help chase
any debt as well as manage the
business.
• Once people are familiar with a
system, there is less work and cost
than doing it manually. That’s why
computers are so prevalent in so
many businesses.
• The paperwork can look more
professional.
There are some potential issues for
locksmiths with adopting software:
• A lack of familiarity with new
software may create issues.
• There is a possibility they will be
dropped in the deep end with no
support.
• Additional cost.
The way to address these issues is:
• It’s important that lockmsiths receive
a full demonstration of any software
they plan to use so that they can see
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for themselves how difficult or easy
it is.
• Talk to other users to hear what their
experience is.
• Choose a supplier that provides
excellent support and specialises in
the trade industry.
• As a result, weigh up the cost versus
the benefits that should accrue.
MTD VERSUS GDPR
Both MTD and GDPR are supported by
the law. The difference between the two
is the need to do something specific to
comply with MTD and the targeted fines
for those that fail to comply. So, there is a
distinct difference.
Having said that, for anyone not VAT
registered, implementation is some time
away. Also, HMRC seem to be promising
that enforcement will be gentle, at least
initially. My hope is that this article will
help with your planning and I would like
to wish you good luck.
Benjamin Dyer is the CEO of Powered
Now. Powered Now aims to take the
pain out of admin and paperwork for
locksmiths and other trade businesses like
installers, plasterers, roofers and many
more.
www.powerednow.com