Making Tax Digital
Making Tax Digital (MTD) means fundamental changes to the way the tax system works. HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world. In the short term this means businesses like yours will be required to make, preserve and then submit your existing tax records digitally.
Businesses are increasingly seeing the benefits of digitisation. Millions of businesses are already banking, paying bills and interacting with their customers or suppliers online, and many are already using accounting software.
‘Making Tax Digital’ integration should eliminate many of the existing paper-based processes. This should mean that businesses can devote more time and attention to maximising business opportunities, but it will need companies to embrace good financial planning.
The MTD Timeline
April 2019: All VAT-registered businesses with a taxable turnover above the VAT threshold will be required to keep their VAT records digitally and send their VAT returns using functional compatible software.
April 2020: Businesses and landlords will need to keep their business tax records digitally and send quarterly summaries of their income and expenses to HMRC using functional compatible software.
HMRC state that after the introduction of Making Tax Digital for VAT (MTDfV) in April 2019 there will be no further MTD legislation until at least April 2020. Therefore the Making Tax Digital for Income Tax proposals for April 2020 may not come in to force at that time.
Making Tax Digital Pilot
The Making Tax Digital for Income Tax pilot is already available on a voluntary basis. If your business signs up to MTD and has no other reportable income they will no longer be required to complete a self-assessment return.
There are currently no proposals to change the dates by which taxes have to be paid or how they are accounted for, but this has been discussed by HMRC with accountants and businesses.
We could be looking at a situation within the next 10 years where businesses will be paying a monthly or quarterly sum to HMRC for all their business tax liabilities?
How can we help?
Where it’s right for the business our recommendation is a move to Cloud Accounting. MTDfV and cloud accounting are a real opportunity to truly digitalise the way you work.
There are a variety of products on the market that provide benefits beyond the basic bookkeeping functionality that can really benefit a business. It can deal with the removal of the manual entry of invoices and bank transactions, to giving you electronic payment solutions, automating debt collection, and industry specifics such as property management, manufacturing and wholesale stock tools, webshop and till systems, etc.
Cloud Accounting with PKF Francis Clark is about more than just software, it’s a way of working together to achieve your business goals. With remote log-in we’ll be able to guide your business and spot potential issues or tax planning opportunities early on. Access to real-time, business critical information allows you to spot patterns and trends quickly, and take advantage of them.
IT’S TIME TO GET READY
If you have any concerns over your existing VAT process our specialist MTD & VAT team can audit the information within your system to identify exceptions, much in the same way HMRC would during an investigation, and provide areas for improvement.