Making Tax Digital An Essential Guide

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Making Tax Digital

Technology has done wondrous things for a vast selection of sectors. The world of accounting has been equally transformed with the software used by our team making the management of finances and the meeting of tax obligations simple for the businesses and sole traders we work with. The government’s plans to make tax entirely digital are well underway. Their initiative, which is aptly named ‘Making Tax Digital’, is on track to come into effect one year from now. If you are VAT registered however, turning your attentions to the digitalisation of tax now is well worth thinking about.

As a leading provider of accounting, payroll, tax and bookkeeping services throughout the North East of England, we help more than 1,200 clients find the reliable, professional support and advice they need. Here we take you through what to expect from the Making Tax Digital scheme and reveal how you can adapt now for a smoother transition.

What is Making Tax Digital?

Making Tax Digital plays a vital role in the government’s plans to help individuals and businesses alike manage tax in an easier to understand, straightforward and more efficient manner. From 1st April 2019, you will have to submit all VAT returns through an online digital system. Through the Making Tax Digital initiative, individuals and businesses will have access to their own personalised digital tax account, a service that is being continuously improved and its features enhanced ahead of next year’s deadline.

What can I expect from the new system?

With ambitions to become the most digitally advanced tax administrator on the planet, the modernisation of the tax system is a pioneering move for HM Revenue & Customs (HMRC). The system itself is based on the delivery of four factors. The Making Tax Digital system will make better use of information, collect and process this information in real time to prevent tax errors, allow for digital interaction with customers and their agents, and provide a single portal for a complete financial picture.

How can I prepare?

The process of submitting your VAT returns via this new digital system is as seamless and straightforward as intended. It’s easy to sign up to a digital accounts package. We recommend using Sage One but there are many packages out there that will be suitable.

The timing of the switch however is where many companies have discovered issues. Numerous individuals and businesses have experienced problems changing their accounts system part way through their financial years. To prepare, aim to switch to a digital accounts package when your financial year comes to an end. If your year end is say 31st August 2018, it would be wise to start using a digital accounts package from 1st September 2018.

You don’t have to go digital alone. To discuss this and any other matters relating to Making Tax Digital, please contact Rob on 0191 251 7599.