Author Archives: Philip Woodgate - Partner

About Philip Woodgate - Partner

T +44 (0)20 7874 8836

Philip advises businesses and their owners, including international businesses coming to UK, helping them set-up and establish in the UK.

He acts as a centre-point to solve business issues - coordinating our specialists and adding selected external partners into the mix where appropriate.

A key part of his role is to provide a fast response and practical advice for technical tax and financial issues.

As a member of the ICAEW IT Faculty Technical Committee, he combines financial and technology skill sets and provides management reporting and accountancy services using cloud technology.

Much has been said about Making Tax Digital and more will be said over the coming months, but the changes being introduced in the first phase from April 2019 are actually fairly straightforward and will only affect VAT registered businesses whose turnover exceeds the VAT registration threshold which is currently £85,000.

Making tax digital for VAT

What is Changing?

Currently VAT registered businesses are required to submit VAT Returns, usually on a quarterly basis, via the HMRC online portal. This requires the completion of the nine boxes of the VAT Return, which can be entered manually or electronically onto the portal and then submitted.

There are still some instances where businesses may submit VAT Returns in paper format, but these cases are relatively rare and if you currently fall into one of the categories that can file by paper then this is not expected to change after April 2019.

With effect from 1 April 2019, VAT registered business with turnover over £85,000 will be required maintain the business records in an electronic format and for the VAT return information to be electronically transmitted to HMRC. There will no longer be an option to manually complete the VAT boxes on the HMRC portal.

For most companies they should be able to process and submit their VAT return as HMRC require without the need for adjustment. It is expected that accounting software providers will  upgrade their systems to automatically incorporate the necessary changes for this to happen.

If you are preparing your accounts on an accounting system, then you should contact your software supplier to ensure that the system is being upgraded before April 2019.

Who needs to do something before April 2019?

If you do not currently use a commercial accounting package to produce your VAT records, for example you are using spreadsheets or keeping paper records, then you will need to change the way you prepare your records for the purpose of submitting VAT returns.

HMRC have confirmed that keeping records on spreadsheets will meet the requirement for electronic record keeping, but it will be necessary to acquire some bridging software to bridge the gap between your spreadsheets and HMRC’s portal which you currently do manually. HMRC have not yet provided any information on available bridging software but we will update this article to provide a link to further information when we become aware that it is available.

If you currently produce your VAT records manually on paper then you will need to change your processes so that you keep your accounting records in a digital format. This may include using spreadsheets or buying accounting software.

Useful links

HMRC list of software suppliers

HMRC VAT notice 700/22

Extending Making Tax Digital to Income Tax

HMRC are keen to point out the benefits of making tax digital to businesses and individuals and there will indeed be some benefits. However, it is also fair to say that one of the main motivations behind the introduction of quarterly digital reporting of business records and income details was to target what the Government perceived as a tax gap particularly in the small business space.

Due to resourcing, HMRC have focused on VAT registered businesses in the first instance, but still plan to roll out the next phase by April 2020 which will bringing small businesses and landlords’ income tax into the arrangements. Business may be required to submit their accounting records quarterly during the course of the year and then make an annual end of year submission to take into account any accounting and tax adjustments.

Whilst we don’t know for certain that this will be introduced as planned by April 2020, HMRC are currently running a voluntary pilot scheme.

Making Corporation Tax Digital

The original roadmap for making tax digital included corporation tax. As yet there have been no announcements on this but provided making tax digital for VAT and Income tax are successfully introduced then Corporation tax will surely follow.

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Our client, dopay, is a fast moving, entrepreneurial international group. The ability to take decisions based on up-to-date financial information is critical.

Dopay has companies in the UK, Netherlands, Egypt and West Africa. As an international group it needs financial information presented in a consolidated form. This presents the group accounts as if it were a single entity – giving clarity to the overall performance of the group.

Unfortunately, preparing group accounts can be a slow and laborious process. A typical scenario is where subsidiary companies report to the parent company. The local currency of each subsidiary company will depend on its country of origin. It could be Hong Kong Dollars, Russian Rubles, Euros, US Dollars, GB Pounds etc.. Whatever the currency used by the subsidiary it needs to be converted into a reporting currency that is used throughout by the international group. It might be that each subsidiary company is using its own local accounting system – in which case the local accounts may need to be reworked in spreadsheets to fit to one consistent group currency and structure. Any checks, updates and corrections can be time consuming and slow to deal with – especially with multiple time zones.

Large international groups will invest heavily in systems and staff to produce group consolidated accounts. For small growing international groups the options are very limited – especially for anything cost effective. The system needs to be powerful enough to deal with dual currency reporting and consolidation, but cost effective, easy to use and flexible.

We have been using Twinfield since 2006 and over this time have built up considerable knowledge of the system for international groups. We sat down with dopay to look at the needs of the business and together we quickly decided that Twinfield was the best system. It overcomes the dual currency issues and provides the speed and efficiencies of a cloud-based solution.

Once the system was identified we collaborated with dopay to implement the system, train the users and produce group accounts. Using this approach we were able to provide our expertise of Twinfield and international groups very cost effectively. It worked seamlessly, especially, as Dopay’s approach is extremely well organised and professional.

Now with the data always on-hand we can provide advice and support quickly.

Khaled Abou-Zied, of dopay said, “The results are excellent. We finally have a much better understanding of our business. We can analyse our figures and can quickly identify the areas of growth. We can look at group accounts but also have the ability to immediately drill down to a specific invoice in Ghana if we need to.

Goodman Jones not only understood the technology but by tapping into their understanding of international businesses we now have financial reporting that is clear, fast and accurate and sets us up for future growth.

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The roll-out of digital tax accounts will help companies to manage their taxes, access information and resolve queries more quickly.

Overseas companies seeking to open and operate subsidiaries in the UK will find this easier to do than ever before.

It can be difficult to start a new business in many countries – even in Europe. Personal visits to government offices may be required, wasting hours to submit or obtain company papers. Original hard-copy documents require certification and apostille – an often-nonsensical process as the information required is freely available to download from government websites. I’ve lost count of the times an exasperated client has shared with me their aggravations of dealing with overseas business affairs.

Open for business

Yet the UK government is keen to increase foreign investment and it is easier to do business here than any other major European economy.

The UK welcomes investors with its skilled labour market, a lower level of bureaucracy and a language that has become the world’s standard for commerce.

Tax policy provides a big competitive advantage for Britain. Corporation tax in the UK is charged at just 20%, which is one of the lowest rates in Europe.

Digital transformation

The UK’s tax authority, HMRC, is becoming a digital organisation. Tax returns are already made online and all taxpayers – personal and corporate – are being given their own digital tax accounts.

The rolling-out of digital tax accounts is being done in phases for completion by 2020. By then the tax authority will have moved to a fully digital tax system.

Using these digital accounts, all payments and correspondence with the tax authority will be conducted online. This will make it easier to deal with the tax system and taxpayers will get more up-to-date and reliable information from the tax authority, along with faster responses to queries.

Digital tax accounts will bring together into simple statements all the various taxes due – which for a company include corporation tax, national insurance and VAT, as well as income tax collected from employees.

Much of the tax system is already online: almost all corporation tax and VAT returns are submitted online. And more than two million small businesses use digital tax accounts.

Financial management

Not only do digital tax accounts improve relationships between a company and the tax authority, they can also be the basis for companies to improve their internal financial management.

HMRC takes the view that businesses should have a computerised accounting system. For our clients this is not an issue. We have cloud-based systems that can connect us with your company, to increase the flow of fully up-to-date financial information. These systems can also be integrated with those of the tax authority, reducing the cost and time it takes to make a tax return.

The UK’s tax system is going digital. The UK is a world centre for technology innovation and the UK government recognises the need to keep pace. It promises the digital transformation of tax administration, leaving more time to plan and utilise the abundance of tax reliefs available in the UK.

To read in more detail the transformation plans of the tax authority, HMRC, click on this link.

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As part of our support for the Fitzrovia Business Improvement District, we are delighted to be involved with our friends and neighbours and the Dylan Thomas in Fitzrovia festival.

The festival celebrates the centenary of the life and work of Dylan Thomas, a fellow Fitzrovia resident. It will also be raising support for several local charities. The festival launches on Monday 20th October and has a series of events that run over the whole week, with something for everyone. We hope you enjoy it.

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Chancellor George Osborne unveiled his fifth Budget amidst signs of growing levels of confidence in the UK’s economic condition.  Keen to drive home the message that the economy is recovering ‘faster than forecast’, the Chancellor announced that the Office for Budget Responsibility had revised its economic growth forecast upwards from 2.4% to 2.7% for 2014.

Find out more with our 2014 Budget Guide.

Download our guide (1MB)

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UK Income Tax – The UK as 100 taxpayers infographic
We have researched some data to create a visual graphic that easily shows the composition of income taxpayers in the UK. Visualising UK taxpayers as just 100 people makes it a little easier to comprehend.

Add this infographic to your website by copying and pasting the following embed code:


<img src="https://www.goodmanjones.com/blog/wp-content/uploads/2013/11/the-uk-as-a-100-taxpayers.jpg" width="540" alt="UK Income Tax – The UK as 100 taxpayers" id="the_img_link">
<a href="https://www.goodmanjones.com/blog/wp-content/uploads/2013/11/the-uk-as-a-100-taxpayers.jpg" id="the_img_link"></a>

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