In today’s technologically driven world, everything we need is now at our fingertips courtesy of the smartphones, tablets and other devices that keep us connected to the net anytime, anywhere. So it comes as no surprise that HM Revenue and Customs (HMRC) is digitalising the UK tax system.
The start of Making Tax Digital (MTD) is now only one year away. Whilst MTD won’t come into effect until April 2019, VAT registered businesses really need to start thinking about its adoption now. Next year’s deadline will make the new digital scheme mandatory for VAT registered businesses over the VAT threshold resulting in a number of key changes for the companies affected. As a leading supplier of professional accounting services, our accountants assist clients with their annual accounts and VAT returns on a regular basis. In this blog post, we take a closer look at what changes VAT registered businesses can expect ahead of the introduction of Making Tax Digital.
Introducing Making Tax Digital
With ambitions to become one of the most digitally advanced tax administrations on the planet, the Making Tax Digital scheme is set to transform and modernise the UK tax system. From 1st April 2019 you will have to submit all VAT returns through an online digital system. This in itself is not a major problem as many companies already use digitised systems to conduct their banking activities, pay bills and interact online.
In the long term, the switch to digital will unlock a number of advantages for businesses of all sizes and niches. Making Tax Digital will ensure better use of information, provide tax details in real time and allow for digital interaction between HMRC and its customers or their agents. The problem businesses may encounter is changing their accounts system part way through their financial year. If your year end is say 31st August 2018 you would be wise to start using a digital accounts package from 1st September 2018 as it would be complicated to swap systems part way through a tax year.
What to do now
Getting familiar with Making Tax Digital and the digital accounts packages the scheme endorses sooner rather than later is recommended. The first businesses have already begun to adopt Making Tax Digital thanks to HMRC’s live pilot scheme, and you can do the same in the run up to the impending deadline. It is easy to sign up to a digital accounts package. We are suggesting Sage One but there are many packages out there that will be suitable.
To discuss this and any other matters relating to Making Tax Digital, please contact Rob on 0191 251 7599.