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Changes to the VAT Flat Rate Scheme “to tackle aggressive abuse”…

It's a topsy-turvy world. Twelve months ago, Britain’s membership of the EU seemed secure and George Osbourne had just delivered the Autumn Statement for 2015. Who could have predicted what would happen in the months that followed, but here we are in November 2016, uncertain of what Brexit has in store, and with a new Prime Minister, and a new Chancellor to deliver the Autumn Statement.

Certainly, a lot has changed in a year, but there are more changes to come.

Last week, the Chancellor announced changes to the VAT Flat Rate Scheme (FRS) to be introduced from 1 April 2017.

FRS is scheme that simplifies VAT for small businesses, reducing paperwork and often providing those who use it with a tax benefit. Small businesses have been able to benefit from FRS since 2002.

The Chancellor's announcement of the changes under the title of ‘Tackling aggressive abuse of the VAT Flat Rate Scheme' has caused a stir, most notably because small businesses have long been encouraged by HMRC to benefit from the scheme. Don’t believe me?

The following is an extract from the HMRC Internal Manual.

Policy and Background: Why was the scheme introduced?

The scheme was introduced as a response to growing concerns about the complexity and compliance costs of VAT for small businesses. It reduces the cost of complying with VAT obligations by simplifying the way that VAT due to HMRC is calculated. Use of the scheme should be encouraged, as it is an important part of our response to the high level objective of reducing compliance costs. You should take the opportunity to discuss this and other schemes whenever contact is made with an eligible business.

Notice the words “Use of the scheme should be encouraged”…and the fact that HMRC officers recommended it.

So Long Spreadsheets…

The spreadsheet has been one of the most enduring tools for businesses for decades. Along with desktop computers, spreadsheets were first adopted on-mass for business use in the late 80s and 90s. It’s impressive that this piece of software has remained popular for so long, but after three decades, is it now time to say so long to spreadsheets?

It’s easy to see why the humble spreadsheet became popular for business. As one of the default programmes loaded on to every PC and laptop, it was cheap and familiar for new entrepreneurs to harness for financial projections and as a cashflow tool to log money coming in and out.

But as we enter a new age of cloud-based apps and connected devices, it is clear that those who continue to rely on spreadsheets as a business staple will find themselves at a competitive disadvantage.

On The Move

Spreadsheets were never designed to be used on a tablet or phone, which is where cloud accounting software steps in.

How the UK government aspires to be like Estonia ...

How the UK government aspires to be like Estonia

Estonia: a small country in Northern Europe and 2001 winner of the Eurovision Song Contest.  Ask someone what they know about Estonia and after a minute of head scratching, a few ‘umms’ and ‘ahhs’, and the above might be their inevitable response.

However, the UK government has realised there is actually a lot more to learn from this Baltic country than writing a catchy pop song.  Since the early 1990s, Estonia has been leading the way as a modern digital government, recently being named ‘The most advanced digital society in the world’ by specialist tech magazine Wired.

It’s no wonder the UK government is aspiring to be more like Estonia.

So what has made this country of just 1.3 million people a leader in digital government?
With a small, declining population and few natural resources, the post-Soviet government ministers recognised the future was a digital-rich economy.  They focused on investing in the IT sector and digitally connecting government services.

THE POWER OF THE CLOUD

Small businesses around the world are increasingly turning to cloud computing and apps to run their operations and solve business problems. 

A recent, global study by Intuit QuickBooks found that 71% of UK small business owners rely on mobile or web-based apps to reduce administrative tasks and grow their business. In comparison, the figure is 58% in the US, 68% in Canada, and 74% in Australia - where the figure is highest. With more than two-in-five small business owners in the UK, US, Canada and Australia stating controlling costs/reducing expenses as their biggest challenge, many are looking to utilise the best technologies to help run their business.

Dominic Allon, Europe VP and Managing Director, Intuit QuickBooks, said: "More small firms than ever are putting technology at the heart of their business and using it to solve everyday problems, and British entrepreneurs are ahead of a trend that is happening on a global scale. Small firms are well known for their creativity in how they grow their business; using digital tools to tackle their challenges head-on is key to their success."

Cloud Based Accountancy Services...

The days of paper based accounts are, thankfully, becoming a thing of the past. As is the idea of storing your accounts on one central computer, praying and hoping that your hard drive isn’t corrupted from an accidentally opened link.

Cloud based accountancy is the perfect antidote to these risks of the past; safe, secure and above all incredibly convenient. It’s a platform that allows you to access data and software online; anytime, anywhere. As long as your device has an internet connection, your small business can stay connected to its data, and to your accountant, 24/7.

Utilising small business software that isn’t available via the cloud can place a huge burden on your business. It requires careful calculations and the devotion of a great deal of time. In contrast, the cloud saves both time and money, thanks to the speed with which it works and the automation of important processes. 

With HMRC planning to ‘Make Tax Digital’, it makes sense that cloud based accountancy should be the way forward. It’s important more than ever that we deal with up-to-date information that is accurate. The cloud guarantees this. 

Entering the world of cloud accounting without any background knowledge or experience of how it works can be a little daunting. You needn’t feel like you are an explorer uncovering something extraordinary however, as we are here to take you through everything you need to know. 

We have the ability and tools to deliver professional cloud services to businesses across every sector. We can outline the benefits of the cloud, and provide you support as you adapt to the changes.