Questions you may have about Making Tax Digital…MTD:
HMRC is bringing its tax services digitally online in a campaign called ‘Making Tax Digital’ (MTD). The process started on 1 April 2019 with the incentive to make the recording and submission of your taxes more accurate. The new system has been designed to avoid over and underpayments so that penalties notices are issued less often, thereby taking up less of the business owner’s time.
Described as the biggest change to the UK tax system since the introduction of Pay-as-you-Earn in 1944, the migration of digital taxation is well underway, but what does this mean for your business?
Will this Making Tax Digital affect me?
From 1 April 2019, businesses with a turnover above the VAT threshold (currently £85,000) now have to keep digital records for VAT purposes and provide this information to HMRC using MTD compliant software. We have been working hard to ensure that all our clients are on the right software and fully MTD compliant.
The first VAT period to be affected by MTD commenced on 1 April 2019. It is possible to voluntarily register with HMRC if you are under the threshold but would like to move onto the MTD scheme.
From 1 April 2020, the MTD campaign will be extended to non VAT registered businesses as the scheme starts to include other taxes such as Corporation tax which from that time will also be required to be submitted digitally using compliant software.
All businesses and individuals will eventually be required to submit information on a quarterly basis to ensure compliance with HMRC rules to maintain their tax affairs up-to-date. As a last resort, spreadsheets are still permitted however the information on them will need to be sent to HMRC using ‘bridging software’ to comply with HMRC’s rules. We recommend compliant software is used from the outset to save time and maintain accuracy and efficiency.
How will it affect my business?
HMRC do not provide their own software but are working closely with software providers to find solutions on making MTD compatible.
What are my next steps?
Your two steps to make sure you are MTD compliant and efficient are:
- Determine if your business has an annual turnover of in excess of £85,000, if it does you need to be compliant; and
- Make sure your accounting records are MTD compliant: We can help you convert all your records onto compliant software.
We have researched the market and tested several systems. The conclusion of our work is to recommend either Xero or Quick Books as your MTD compliant cloud-based system.
We are Platinum partners for both Xero and QuickBooks and as such, in an enviable position to advise and implement your new cloud system.
We specialise in looking after client’s records for them, however, if you decide to maintain your accounting records independently, we recommend you choose either Xero or Quick Books and that undergo training on your chosen system to avoid any errors occurring.
The opportunity to upgrade your systems and procedures can be very beneficial as you are able to access the best information about your business at your fingertips, which makes you better able to make informed decisions.
The benefit of outsourcing your records on a cloud system can save you valuable time. We are experienced in converting records onto the cloud as well as maintaining them once the migration has completed.
See the Cloud section to review the benefits of having such a system. We’ll make monthly reports available as well as giving important, timely advice and highlighting issues requiring your action.
We will of course also make sure that you are fully compliant with MTD submissions!
For more information contact us today or call 01604 345865
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