We are now nine months away from the start of Making Tax Digital. The brave new world will soon be upon us, but what does it all mean?
From April 2019, the reporting landscape is set to change significantly for some as we see the first phase of Making Tax Digital (MTD). Initially, this is going to affect all businesses over the VAT threshold of £85,000 who will need to report their VAT figures digitally.
All income and business-related taxes will ultimately require digital transmission of information to HMRC, and in many cases this will mean businesses changing the way they keep their records. All, it seems, to satisfy the requirements of bureaucracy! But is this just more red tape or is there an upside?The good news is that there is most definitely a positive side. Over recent years, the technology around record keeping has moved on in leaps and bounds and it will definitely meet the requirements of the new age of digital taxation, reduce errors and allow
timely strategic decisions, enabling improvement.
However, it has recently been reported that the British Chambers of Commerce has called for the MTD initiative to be delayed after their research revealed that 24% of firms have never heard of it. A further 66% knew the project only by name. Their concern is that this demonstrates a “widespread lack of awareness among business communities about the switch to a digitised tax system”.
Rob Case, Partner and Head of Tax, comments; “We are not aware of any changes to the proposed timescales and fully expect MTD for VAT to be implemented from April next year and we support the ultimate goal that the government is seeking to achieve.
“The suggested changes for MTD should not be too onerous. We are advocating that clients and prospects consider the use of technology in keeping records, not only to meet future compliance needs and the potential time savings that can be achieved in respect of data entry, but also because the potential added value of real-time information for clients and their advisors in making everyday business decisions guiding their strategy and goals.
“We are helping businesses to prepare for the changes ahead and can really see the benefit that cloud accounting can bring.”
There are a number of cloud accounting packages that will meet the MTD requirements and these will do so much more than just fulfilling the new rules. They are intelligent enough to help with your bookkeeping, linking directly with your bank account, so you can update your records as frequently as you wish. We are proud to be a Xero gold partner and support Sage Business Cloud, which are our preferred software packages.
There are add-ons to the packages that will largely automate your supplier invoices and also produce your sales invoices. These can also help with your stock records accordingly. So you can have a more or less complete picture at the press of a button, wherever you are, and more time to focus on the day-to-day running of your business. So it’s not just a bureaucratic requirement – just think of the extra information we will all have to make the most of what is going well, improve productivity and change what’s not working. Exciting times!
Please contact us to have a chat if you are unclear about what this means for your business or if you would like a demonstration of Xero or Sage Business Cloud – call us on 01242 776000 or use the contact form to send us a message.