Making Tax Digital for VAT and the UK Umbrella Companies

Making Tax Digital for VAT and the UK Umbrella Companies

Since the announcement of the probability of the UK tax system’s digitisation in the Summer 2015 Budget, the Making Tax Digital has become a white-hot subject – not only in the United Kingdom but in the world. The tax system’s digitisation earned praises and support yet as well as misconceptions and repercussions from the public.

In April 1st 2019, it officially arrived in the UK’s tax administration as the newly implemented system. Now that it’s formally operating in the grounds of the UK’s tax industry, most of the VAT-registered businesses or companies with revenue more than £85,000 are now required to commit on their tax duties on a quarterly basis and in a digital format.

Making Tax Digital can be complicated in every way especially that released details or information are only limited. With that, this article discusses not only about the MTD for VAT but it also relates the new system with the UK umbrella companies.

Read through the pages and find out more about the Making Tax Digital and the UK umbrella companies.

What is Making Tax Digital?

Making Tax Digital is also known as the UK’s initiative is the foreseen answer to finally make the end of the tax return happen. Moreover, it’s expected to place the UK tax administration in one of the most progressive tax administrations in the whole world.

The newly implemented tax system is believed to deliver a more efficient, more effective, and a simplified system to taxpayers. To make shifting into a digital format more achievable, the HMRC keeps on working carefully with the trusted software providers to produce MTD-compliant bridging software.

What is the bridging software?

The bridging software is supposed as HMRC’s tool that connects the clients’ digital tax account with HMRC’s system. The bridging software must be MTD-compliant in every way to fully comply with the new and digitised tax system.

READ  Instagram Marketing- Know What Works Well For Your Audience

Through the bridging software, the HMRC will be able to access clients’ tax information which is easier and better than the previous tax system. Whether the bridging software is free or not, the HMRC can’t give a final answer since the software providers are the ones who’ll be deciding for that.

What are the Umbrella Companies?

The umbrella companies refer to a company, institution or organisation that hires agency contractors who work on provisional contract assignments, normally through a recruitment agency in the United Kingdom.

Also Read:Corporate Tax Planning Strategies for Small Business Owners

From the time the British government launched so-called “IR35” legislation that forms tests to ascertain the employment status and expertise to make use of small company tax reliefs, the umbrella companies have become more accepted.

Also, umbrella companies sustain payroll on behalf of the contractor and charge the agency for the work fulfilled by the contractor. With that, there are a few bridging software that offers a specialised feature suited for the UK umbrella companies. Below are the key features that might be considered by the UK umbrella companies when looking for the best bridging software.

Provide a variety of models

It’s better to look for the bridging software that offers the capacity for umbrella companies to manage a wide variety of umbrella payrolls models and deviations including CIS, self-employed as PAYE, pay-Between-Assignments, increased holiday pay; all with a completely customisable margin structure.

Timesheet upload/manual timesheet

To make payrolls process easier for umbrella companies, several bridging software also grants Timesheet Definition tool which allows a user to form a custom template in order to match an agencies’ timesheet file. With that, uploading the whole file becomes faster and easier to do and create all the timesheets in one click.

The personal timesheets are also possible to be created manually, and both programs will also form invoices as part of the process.

READ  Reasons for Taking the Risk of Accepting a New Job Requiring You to Move

Advance module

For umbrella companies, look for bridging software that offers advance module. A few bridging software providers have an easier way to use the module for advance payments that enable users to monitor sent advances. Also, the advance module offers users to set a customisable repayment schedule to guarantee they’re recovering funds back on each payroll.

Payroll without invoice

This key or special feature offered to umbrella companies by the bridging software refers to the ability to manage payrolls without the necessity of creating an invoice. This can be applied in instances such as creating a legal payment, a holiday pay-out or a pension refund.

Completely integrated bank matching

With this key feature by the bridging software, credit control, and running a large amount of incoming and outgoing funds are made easier for umbrella companies.

AUTHOR BIO:

Kath Ramirez embraced the dream of being a writer since she was in 4th grade. She took it seriously and she’s now a graduate of AB Journalism and a current writer to Australian and United Kingdom-based companies. Aside from writing, Kath also keeps herself busy spending time with her family, cherishing the role of a mom to 3 dogs and a puppy, reading random books, and diving into the world of photography. She’s not even a pro to whatever she’s engaged into right now, but one thing she knows, she’s happy and that’s more than enough.

 

Facebook Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.