MAKING TAX DIGITAL
”The age of digital tax is coming – here’s how we can help”
What is Making Tax Digital?
Making Tax Digital is an initiative being implemented by HMRC to digitise the UK’s tax system. The aim is to make it easier for businesses to keep track of what they owe and pay the right amount of tax each time they submit a return online.
Each year the government loses out on £9bn in unpaid taxes resulting from errors, while the overall tax gap is a staggering £34bn, which explains why it’s keen to introduce a new system that will make this a thing of the past. MTD will initially focus on VAT returns from VAT-registered businesses, but the plan is to expand the initiative during the next few years.
Why is MTD significant for businesses?
MTD is a big change for all involved. Tax is set to become increasingly digital as HMRC wants to see a seamless flow of information from each business. This means that all businesses will be forced to keep their records digitally (i.e. using software to record all their transactions).
HMRC has made clear that it’s committed to digitising the UK’s tax system, so it’s only a matter of time until keeping records using software and paying tax online is a prerequisite for every business, regardless of its size. What’s more, the days of submitting annual tax returns will be gone. Instead, businesses will need to submit information about their profits, expenditure and revenues to HMRC every quarter under MTD, and to achieve this they will need to use MTD-compliant software.
Who will be affected by MTD?
MTD will initially focus on businesses that submit VAT returns, so for the time being it’s going to be VAT-registered businesses with a taxable turnover exceeding £85,000, that are most affected by the change to digital taxation.
When will MTD come into play?
Monday 1st April 2019 is the day when MTD for VAT comes into full effect. Therefore, any VAT return with an accounting period starting on or after that date will be impacted.
What problems are SMEs facing?
Many SMEs don’t know about the changes MTD will bring – and a significant number of those businesses that are aware of what it means aren’t prepared for managing their finances online or submitting returns to HMRC every quarter.
Put simply, if you’re currently using offline, desktop-based spreadsheets to manage your accounts – or something more basic like a shoebox full of receipts or paper records that you hand to your accountant every year – you’ll have no choice but to adopt a new, MTD-compliant method.
How can we help you prepare for MTD?
Regardless of how big your company is or what features you need – we have a solution that can help you prepare for MTD. BlackStone Accountancy provide cloud accounting solutions for SMEs that let you record your data and remain compliant.
We can set up your cloud account so that it can be maintained on an ongoing basis by yourself or we can simply take all the compliance work off your hands leaving you free to concentrate on your business and things that really matter.