The Making Tax Digital initiative is aiming to simplify the UK’s tax system, but many business owners feel that it is going to complicate their tax affairs and ultimately end up costing them more. The good news is that this shouldn’t be the case if you’re properly prepared.
The Making Tax Digital (MTD) initiative intends to digitise the UK tax system to create an accessible and transparent system for tax payers and HMRC. Under MTD, paper records will no longer meet the requirements of tax law, and it will be mandatory to use software to keep your businesses’ accounting records. Tax payers will also be required to submit updates to HMRC each quarter directly via accounting software.
See also: What Making Tax Digital means for your small business
The thought of having to digitise all of your accounting records, as well as report on all taxes each quarter, can seem daunting to say the least. Follow the steps below to make sure you’re on top of all of HMRC’s requirements.
Step 1: How to figure out your MTD deadline
Making Tax Digital was originally intended to come into full force by April 2018. The government, however, has changed the timeline of the initiative to give businesses more time to prepare for the shift.
The revised timeline for MTD is:
- From April 2019: All VAT-registered businesses with a turnover above the VAT threshold will need to report on VAT digitally (each quarter, as per usual)
- From April 2020: All businesses will need to report on Corporation Tax, as well as VAT, digitally
As VAT already requires businesses to submit quarterly returns, no business will need to provide information to HMRC more regularly during the initial phase than they already do. The only change will be that all VAT returns will need to be submitted digitally using the correct software. This was done to give businesses and landlords time to adapt to the changes before being asked to keep digital records for other taxes.
Step 2: Get a head start, get your accounts in order now
Depending on how your accounts are currently kept, you may need to implement or upgrade your accounting software, and your record keeping processes will most likely need to change. Now is the time to ensure that your accounts and tax affairs are in order. Don’t wait until the last minute only to find that your business accounts are not compliant with HMRC.
Don’t go it alone
If the thought of installing accounting software and dealing with VAT returns and Corporation Tax is too much for you to bear, there is a simple and cost-effective solution. You can hire a qualified accountant who can handle all your accounting needs from start to finish.
Our accountants stay at the forefront of all HMRC changes, and we can take care of all your reporting requirements, from making sure the reports are done in the correct digital format to submitting them to HMRC on time. This will allow you to focus on the business side of things without having to worry about whether or not you’re up to date with all of your HMRC filing obligations. What’s more, HMRC will deal with our accountants should any issues arise regarding your accounts.
Our accounting team will be happy to support you throughout the transition to Making Tax Digital. Get in touch with our accountants on +44 (0) 20 7759 7553. or firstname.lastname@example.org for further assistance.
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