The Future of Accounting, Apps and Automation

May 25, 2021

We have seen a seismic shift in the accounting sector which has led to a more dynamic, efficient, and progressive way of working.

There are several software providers who offer cloud accounting, Xero being a prime example. Since the early 2000’s we have seen a change in the accounting sector which has led to a completely new way of working for many accountants.

Whilst there still are many who undertake a more traditional way of working, others have benefited from enhancing their staff’s skillsets and knowledge by delving into the digital world. This has not only given them an advantage over others, but puts them one step ahead in adhering to HMRC’s ‘Making Tax Digital’ requirements. The undertaking of cloud accounting software by accountants for those who wish to be at the forefront of emerging technologies has also paved the way for many to provide additional consultancy services through the use of real time accounting data.

There is no denying the benefits of using cloud accounting software: anytime access, real time data and live bank feeds to name but a few. Aside from the features, the cost is another significant factor when deciding which software to use. Many clients have been faced with costly product upgrades each year as well as increased pricing. However, Xero for example, represents great value for money with a monthly rolling subscription, with no hidden extras. So, have you explored how Xero could work for your business?

The coronavirus pandemic further highlighted the need for businesses to have a complete insight into their finances, whether it be up to date accounts to access government grants, or to ensure effective cash flow management. The requirement to have real time, robust financial data has never been so important. As businesses move to a hybrid working system, the need for cloud-based and accessible accounting software is now a requirement, rather than an option, to enable staff to continue their roles regardless of where they are based.

We have seen a complete change in the methods used to perform day to day accounting tasks. Whether it be through a live bank feed in real time, or the utilisation of apps to enhance areas such as credit control. Cloud software now allows you to automate the bank reconciliation process by utilising bank rules for efficiency and automatic posting of journals.

There is no doubt we are witnessing a change in the role of an accountant, driven by the introduction of new technology and regulations. Our clients deserve to be kept up to date with the latest technology which only helps them adhere to new regulations, such as Making Tax Digital. Many would argue HMRC have paved the way for a need to record financial records digitally, but was there already a shift to modern day accounting?

Regardless of where digital adoption originated, we are currently seeing a surge in interest from many businesses who require real time, accurate reporting. More so for cash flow purposes, but also to regain an understanding of where their business is positioned. The likes of Xero and its excess of 800 apps makes it a very popular option for businesses who want to delve into the modern way of accounting and ensure they have a complete, real time insight into their finances. Gone are the days of receiving out of date management accounts, why not get on board with the cloud movement and reap the benefits too?

There is no question that Xero is positioned at the top of the market with an average price of £20 per month, considerably less than many other rival software providers. Price, paired with its unlimited number of users and ability to build with the use of apps makes it even more appealing.

Please contact our Cloud Accounting team to learn more.

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Virtual Kiltwalk 2021

April 28, 2021

Congratulations to all our Alexander Sloan team who took part in the Virtual Kiltwalk 2021 – and raised over £5,000 in the process!!

Over the weekend of 23-25 April, some of our team here at Alexander Sloan took part in the Virtual Kiltwalk Weekend, each person aiming to walk between 6 and 26 miles over the weekend.

Thankfully, the weather was beautiful and great for walking and each person averaged a whopping 19 miles – excluding all the extra miles clocked up by supportive family members and dogs!

With Scotland still in lockdown, unfortunately we couldn’t all join up but our team could be seen walking around Aberfoyle, Falkirk, Glasgow and even up Meikle Bin.

Congratulations to all who took part and we hope your feet and legs are recovering! A huge thanks also to all those who donated so generously.

Our team raised an incredible total of £5,182.50 – so a big thank you to all! The money raised will go to Alexander Sloan’s 2021 Charity of the Year.

This year, Alexander Sloan’s Charity of the Year is SANDS, a national charity providing support to anyone affected by the death of a baby.

To learn more about the charity and their work, please visit www.sands.org.uk.

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Making Tax Digital

March 22, 2021

From 1 April, VAT registered organisations will face further obligations from HMRC’s drive towards Making Tax Digital

Making Tax Digital – What happens next?

For many years HMRC have had high ambitions of becoming the world’s ‘most digitally advanced tax administration’ and in doing so they are shaking up the way in which individuals and businesses record their tax affairs. By implementing the Making Tax Digital (MTD) scheme, HMRC plan on initially mandating digital record keeping to reduce the UK tax gap, which lies at c.£31 billion of which £9 billion is attributable to ‘errors and failure to take reasonable care’. So where are we now and what happens next?

Well, since April 2019 most UK VAT Registered businesses with taxable turnover above the VAT threshold of £85,000 were mandated to maintain digital VAT records. This also meant they were required to submit their VAT returns using Making Tax Digital (MTD) compatible software. For businesses to ensure they could apply these new processes, HMRC implemented a one-year soft landing period, which was later extended a further year, due to the COVID-19 pandemic.

However, from 1 April 2021, UK VAT registered businesses will face further MTD obligations which were initially meant to be implemented from April 2020 but also delayed due to the COVID-19 pandemic. These new obligations centre around the requirement for a ‘digital link’. According to HMRC this essentially means there is a need ‘to use a compatible software package or other software that connect to HMRC systems’.

Regardless of your current situation, from 1 April 2022 all UK VAT registered businesses must sign up to be MTD registered, regardless of whether they have exceeded the VAT threshold. So, are you prepared? If not, why not make the move to using MTD compliant software in advance of the new changes?

How will this affect my business?

If you have not already done so, you will be required to keep your VAT records in digital form. We recommend using cloud accounting software that is MTD compliant, such as Xero. In doing so you will be adhering to HMRC’s policies by utilising a ‘digital link’.

What is a digital link?

For example, if you use multiple software packages to keep records or submit VAT returns you will need to essentially link them, without any manual input. The most common example for businesses is the use of spreadsheets where figures are then copied and pasted into another system for the VAT return to be submitted – this is will no longer be allowed.

HMRC confirmed ways in which you could link software:

using formulae to link cells in spreadsheet’s
emailing records
putting records on a portable device to give to your agent
importing and exporting XML and CSV files
downloading and uploading files

There are however some exceptions to the above obligations. HMRC has granted exemptions for manual calculations for VAT schemes such as partial exemption, flat rate or the capital goods scheme. The digital links between the software packages used, need to be in place before the business’s first VAT period after the 1st of April 2021.

What if I can’t implement the ‘digital link’ in time for April 2021?

HMRC has offered an option for businesses to apply for an extension to the 1 April 2021 deadline if it can be proven that there is no reasonable fix to their legacy systems. The extension would involve notifying HMRC as soon as possible and providing a comprehensive plan to resolve the issues. We would advise you contact HMRC as soon as possible if you require extension.

How can we help

We have been assisting clients for some time now to ensure they are using MTD compliant software. As well as adhering to HMRC MTD rules, businesses have benefitted from the additional benefits of using Cloud Accounting software such as Xero. MTD for VAT was the first of many areas which HMRC will target, there are already plans for digitising Income Tax in 2023 and Corporation Tax in 2026.

So, are you confident you are using the right software? You may not be VAT registered, but knowing HMRC’s plan for the years ahead, we would encourage you to review your financial systems at this stage and plan ahead. Why not get in touch and let us help ensure you are ready for the changes ahead. We have a range of Cloud Consultancy services which can help ensure your business in not only MTD ready but ensure accessibility robust real time financial data.

Please contact us to learn more.

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2021 Budget

March 4, 2021

The Chancellor announced a range of measures in his 2021 Budget on 3 March 2021 with upcoming changes to corporation tax a key feature.

The Chancellor has pledged to do ‘whatever it takes’ during the pandemic to support business and key announcements in the 2021 Budget, delivered on 3 March 2021, were as follows:

An extension to the furlough scheme until the end of September 2021;

An extension to the SEISS scheme to support the self-employed;

The reduced 5% VAT rate for the hospitality sector will remain in place until September 2021 with a transition rate of 12.5% from then until March 2022;

Corporation Tax rates will rise to 25% from April 2023, though a Small Profits Rate of 19% will be retained for companies reporting smaller profits;

A super-deduction, available from 1 April 2021 to 31 March 2023, for tax purposes of 130% on qualifying capital expenditure;

The Personal Allowance threshold will be frozen for five years once it increases in April 2021.

For further details, please click below to read our 2021 Budget Summary:

2021 Budget Summary

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VAT Payment Deferral Options

February 23, 2021

VAT payments that were deferred from last year can be spread over the next 11 months.

COVID-19 – VAT payment deferral options

It has almost been one year since the UK Government announced that certain VAT payments could be deferred to support businesses during the COVID -19 pandemic. The VAT deferral was available to all UK VAT registered businesses with payments due between 20 March 2020 and 30 June 2020, except for the VAT MOSS payments. In addition to this announcement, HMRC stated they would not charge any interest or penalties, but instead requested all VAT returns during this period be filed as normal with all filing deadlines still fully applicable. As the VAT payment deferral was automatic with no application or notification required to HMRC, we outline below the options currently available to you.

When do I need to pay my deferred VAT payment?

Initially, when the deferral was announced, businesses were given a deadline of 31 March 2021 to pay any VAT liabilities. However, a further announcement was made on 24 September 2020 in the Chancellor’s Winter Economy Plan, stating that instead of a hard deadline of 31 March 2021, businesses will also have the choice of making up to eleven equal instalments via the VAT deferral new payment scheme.

What are my payment options?

If you have deferred VAT payments due between 20 March 2020 and 30 June 2020 and have yet to make the payment, you can choose from the following to avoid any interest or penalties being charged:

Pay the deferred VAT in full on or before 31 March 2021.
Join the VAT deferral new payment scheme via the online service within your Government Gateway account which opens between 23 February 2021 and 21 June 2021
Speak to HMRC by 30 June 2021 if you need extra help to pay.

How do I join the VAT deferral new payment scheme?

The VAT deferral new payment scheme will commence via an online service within your Government Gateway account from 23 February 2021 to 21 June 2021 and will allow you to pay your deferred VAT in equal instalments, interest–free. You have the option to choose the number of instalments you wish to pay, depending on when you join the scheme.

The number of instalments available to you is determined by the month in which you join the scheme. As the scheme is available to join until 21 June 2021, this is the last date you can join to qualify for paying in instalments, with all instalments needing paid by the end of March 2022.

The table below extracted from HMRC guidance, outlines the cut–off dates for joining the scheme as well as the maximum number of instalments available, including the first payment.

If you join by:	Number of instalments available to you:
19 March 2021	11
21 April 2021	10
19 May 2021	9
21 June 2021	8

Monthly joining deadline (HMRC 2021)

Please note that if you are on the VAT Annual Accounting Scheme or the VAT Payment on Account scheme you will not be able to join from 23 February 2021, instead, you will be invited to join towards the end of March 2021.

Can anyone join the VAT payment new deferral scheme?

To use the online service, you must join the scheme yourself, your agent cannot complete this for you. You must also meet the following criteria:

Have deferred VAT to pay
Pay your first instalment when you join
Ensure all of your VAT returns have been submitted from the past 4 years
Pay by direct debit but if this is not possible speak to an advisor on the COVID-19 helpline on 0800 024 1222
Have access to your own Government Gateway account to join the scheme
Know exactly how much you owe HMRC

If any businesses would like to join the new payment scheme but do not have access to a UK bank account, are unable to pay by direct debit, or have dual signatories on their bank account, we would encourage you to contact the COVID-19 helpline on 0800 024 1222.

For further information please see HMRC’s guidance here

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Webinar – VAT on Domestic Reverse Charge

February 16, 2021

Join us on Monday 22nd February at 2.30 pm as our VAT Consultant discusses the VAT Domestic Reverse Charge changes for the Construction Industry,

Join us on Monday 22nd February at 2.30 pm as our VAT Consultant discusses the VAT Domestic Reverse Charge changes for the Construction Industry, how it works, and what impact it may have on your business. Don’t miss out on this chance to understand the new rules which come into effect from 1 March 2021.

Please contact Kevin Booth at kevin.booth@alexandersloan.co.uk to reserve your place.

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Covid Restrictions highlight benefits of Cloud Accounting

November 11, 2020

Restrictions on movement in 2020 and reliance on digital world has drawn more businesses to the Cloud

At Alexander Sloan we have long championed the benefits of using cloud accounting and this will become even more relevant as business owners and organisations react to the easing of lockdown restrictions and begin focusing on the future. However, as the uncertainty of future lockdowns continues, we would encourage you to make the move to cloud accounting software now and ensure you are taking the necessary steps to look after your business financially.

Your sole objective may be to recover and rebuild your business and in doing so you should consider the advantages of implementing cloud accounting to monitor your business finances. It is no secret that many businesses struggled with accessing government support during the summer of 2020. This was primarily due to the lack of up to date accounting information and restricted access to their accounting records due to remote working, which led to increased stress and business uncertainty.

As we now look towards the ‘new normal’, naturally we will try to hold on to the processes and procedures that we are well acquainted with. However, in doing so, are we missing the chance to make positive changes to our businesses by not ensuring we are well prepared for the risk of further lockdowns?

Why is this important?

For many years we have encouraged a move to cloud accounting to comply with HMRC’s Making Tax Digital requirements, or simply to embrace new technologies. However, this year, our message has been shaped by the business effects due to COVID-19.

We want to ensure you have complete visibility of your business finances by being able to access this anytime and anywhere, in real-time. As the pandemic led to offices being closed and a move to home working, many businesses had paperwork such as bank statements, invoices, and bills in their offices which were not accessible to finance teams. By implementing cloud accounting, the need for paperwork and desktop applications would be eliminated with the use of bank feeds and automatic invoicing.

COVID-19 is forcing businesses of all types to change the way they operate due to social distancing. Inefficiencies with the use of legacy processes that were once ignored have now been extremely exposed. These legacy processes also relate to manual accounting procedures which were paper focused but are now being adapted to ensure a more ‘access anytime, anywhere’ approach.

As the uncertainty of how long the pandemic will go on for increases to rise, we would encourage taking steps now to ensure you have complete access to your financials in the event of further lockdowns. By making a move to cloud-based accounting software now, you would be taking the necessary steps to ensure your business finances are fully accessible and eliminate the risk of key financial information being left behind in offices if further restrictions are imposed. As businesses continue to work from home, you will have peace of mind in knowing exactly where your business is financially and allow you to have real-time reporting accessible to you at any time.

Transitioning to remote working, the new norm?

The COVID-19 outbreak forced millions to embrace working from home and to undertake flexible working to a heightened level. This led to different means of working and forced the business into alternative methods of communicating with and managing their employees. This may have been through the implementation of Zoom or Microsoft Teams, however, if we think of your finance function – this would work in the same way. Cloud accounting has paved the way for remote working and ensuring complete visibility and access to your business finances.

Whilst your finance team is working from home, they can be accessing your accounting software remotely and able to ensure your accounting records are kept up to date. Not only does this ensure your staff can continue working, but it also ensures you have complete real-time information and can make better-informed business decisions.

Moving your accounting processes to the cloud will allow you to save everything you require online so that it can be accessed from anywhere, at any time. This will also make it easy for your teams to collaborate regardless of where they are working. Cloud accounting will allow you to save documents online rather than filing paperwork in offices. This will drastically reduce the amount of paperwork, printing costs, and manual input, whilst also speeding up the invoice payment process, leading to an overall more efficient way of working.

How can we help

Please contact us to find out more about cloud accounting, and how we can help your business. We offer services such as a complete migration to cloud software as well as training and consultancy services, to ensure you are ready for any eventuality. We continue to encourage the use of cloud accounting and would urge you to speak with us if you have any concerns regarding your current finance function and what to do next. We want to ensure you have complete visibility and real-time access to your accounting records as the uncertainly of further lockdowns again poses risks in you not being able to access your business finances when you most require them.

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Furlough Scheme extended to March 2020, SEISS support increased

November 5, 2020

Government agrees to extend furlough to March

Key Points from the surprise announcement today:

The Job Retention Scheme has been extended to 31 March 2021
Employees made redundant after 23 September 2020 can be re-employed and furloughed.
Usual Wage calculated by reference to salary at 30 October 2020 but only for newly employed employees.
The Job Support Scheme is postponed.
The Job Retention Bonus (due to be paid in February 2021) has been cancelled.
Self Employed Income Support Scheme (SEISS) 3^rd grant increased to 80% of trading profits for 3 months.

The furlough scheme (or Job Retention Scheme) has now been extended to the end of March 2021, it was announced at lunchtime today (5 November), and will apply throughout the UK. The scheme will pay up to 80% of an employee’s wages up to a cap of £2,500 a month. The extension of the scheme into November was confirmed last Friday, but this extends the scheme for a further four months and at the same rates and conditions. The Government will issue full guidance on 10 November.

https://www.gov.uk/government/publications/extension-to-the-coronavirus-job-retention-scheme/extension-of-the-coronavirus-job-retention-scheme

As noted when the extension into November was confirmed last week, the furlough scheme will operate in a similar way to the JRS in August 2020 (ie, employer can claim for 80% of usual wages for hours not worked but must contribute fully towards employer’s national insurance and employer’s pension contributions).

The Government has also confirmed that anyone made redundant after 23 September 2020 (when the replacement Job Support Scheme was first announced) could be re-hired, at the employer’s discretion, and be furloughed. This was a similar situation to what happened when the JRS was originally announced back in March.

The guidance states that the basis of the claim (the ‘usual wages’) for employees that were employed on or before 19 March 2020 remains their pay at that date. For new employees hired between 20 March and 30 October , the calculations of their furlough rate will be based on thei pay period immediately prior to 30 October or, for staff on variable hours, average earnings from start of employment to start date of furlough.

The government has also confirmed that the Job Support Scheme has been further postponed and that the Job Retention Bonus (JRB) will now not be paid in February 2021 and has been cancelled.

The Self-Employed Income Support Scheme (SEISS) will also be increased and the claim for November 2020 to January 2021 will now cover 80% of prior average trading profits. This level of support is similar to the first grant claim that was claimable in June 2020. This had been increased last Friday to cover the equivalent of 55% of three months trading profits but, in line with the extension of the furlough scheme, this has now increased to a full 80%. This is expected to be claimable from early December.

Alexander Sloan

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Furlough extended to November

October 31, 2020

Job Retention Scheme will be extended for another month

The announcement by the Prime Minister yesterday evening (31 October) of a second lockdown in England contained confirmation that the Coronavirus Job Retention Scheme (CJRS) (the ‘furlough scheme’) would be extended until 30 November.

What this means is that the commencement of the Job Support Scheme, due to start 1 November, has been delayed until the CJRS ends. The UK Government has confirmed that the Furlough scheme extension will apply to all UK nations, so whether your Scottish business is legally required to close or whether your staff are able to work at least 20% of their usual hours is not relevant for November.

https://www.gov.uk/government/news/furlough-scheme-extended-and-further-economic-support-announced

Key Features of CJRS Extended:

Employees eligible to 80% of usual wages up to a maximum of £2,500 per month;

The Government will cover 80% of the usual wages (in September this had reduced to 70%, October to 60%);
The employer must pay employer’s national insurance and pension contributions, these are not claimable;
Flexible furlough will be allowed as well as full furlough;
Employers can top up employee wages if they wish.
Employee must have been on the payroll on 30 October 2020

The rules seem similar to those that were in place for August 2020 with the one key difference being that the employee could have been on the payroll at 30 October (not just on 19 March). There is no mention in the (currently limited) guidance that the employee need to have been previously furloughed (a key condition for being flexibly furloughed before). The methodology of calculating hours and wages will remain the same but it’s not yet clear whether usual wage is now based on that at 30 October and not February 2020. Further detail will be issued shortly by HMRC.

In summary, the Furlough Scheme is being extended for another month and the JSS Open / JSS Closed schemes are not starting until at least December. This change in Government support may impact on decisions on whether to keep open or temporarily close parts of your business.

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Working from Home Allowance and JSS changes

October 23, 2020

Staff can claim a tax free allowance for home working

Working from Home Allowance

Staff that are working from home may be able to make a tax relief claim. From 6^th April 2020 they can claim £6 per week without having provide any evidence of costs incurred. Alternatively, the employee can claim the exact amount of costs incurred in working from home. This would include additional costs such as heating, new broadband connection and business calls, but not costs that would have been incurred irrespective of whether the employee was working from home, for example rent or mortgage interest. Staff may also be able to claim relief for equipment or furniture they have purchased for home working.

The following conditions apply:

The staff member must not be working from home through choice
The employer can’t have already compensated the staff member for any costs they are incurring by working from home.

Job Support Scheme Changes

The UK Government has updated its plan for jobs to increase support for business in the winter period.

The Job Support Scheme will come into effect on 1 November 2020 and will replace the initial Furlough scheme. The government has made the following changes to its initial proposals:

The minimum hours required for employees to work has dropped from 33% to 20% and
the employer contribution for non-worked hours has dropped from 1/3 to 5%.

The Government will pay 61.67% of hours not worked up to a cap of £1,541.75 per month, with the employer contributing 5% of non-worked hours up to a cap of £125 per month. These caps are based on a monthly reference salary of £3,125. This will ensure employees earn a minimum of at least 73% of their normal wages, where their usual wages do not exceed the reference salary. The employee will have to work a minimum of 20% of their normal hours.

To give an example of the impact of these changes. An employee is normally paid £1200 per month (ignoring tax / NIC for simplicity):

Initial Proposal

Hours Worked	Employer Pays(Gross)	Government Pays	Employee Receives (Gross)	Percentage of Normal Pay employee receives
33%	(400+267)=667	267	934	77.8%
50%	(600+200) =800	200	1000	83.3%
75%	(900+100)=1000	100	1100	91.6%

This has now been changed to:

Hours Worked	Employer Pays(Gross)	Government Pays	Employee Receives (Gross)	Percentage of Normal Pay employee receives
20%	(240+48)=288	592	880	73.3%
33%	(400+40)=440	493	933	77.8%
50%	(600+30) =630	370	1000	83.3%
75%	(900+15)=915	185	1100	91.6%

There is no change in the amount received by the employee, but the employer’s contribution is substantially reduced.

Full details can be found at:

https://www.gov.uk/government/news/plan-for-jobs-chancellor-increases-financial-support-for-businesses-and-workers

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