Making Tax Digital: How We Can Help Your Business Prepare
Making Tax Digital (MTD) is an ambitious initiative by HM Revenue and Customs to modernise the UK tax system through enhanced use of digital data, with the ultimate aim of becoming the most efficient tax authority in the world.
Under the proposals every business, charity and individual will have a digital tax account, bringing together each taxpayer’s details in one place. A lot of information will be automatically uploaded to the account by banks, pension providers and government departments. The proposals will also require most businesses to submit financial information to HMRC on a quarterly basis.
It is proposed that most businesses, including companies and charities, partnerships and individual tax payers who are self-employed and some who are letting out property, will be required to keep their records in a digital format and submit them to HMRC using MTD compliant software.
These changes clearly impose a substantially increased administrative burden. The elevated frequency of reporting will require additional services from the accountant or in-house team. The flip side of this is that MTD also helps provide your business with a better understanding of the financial position.
While it will create a challenge for many, MTD will also bring significant benefits in the longer-term to businesses, including improving their decision-making process through more accurate and up-to-date information.
There will be a better understanding of tax liabilities and therefore should eliminate any surprises.
While the initial Making Tax Digital deadline of April 2019 targets roughly 2.55 million larger businesses with turnover over the £85,000 VAT threshold, smaller businesses will eventually also have to follow suit.
You will need to be using accounting software that is MTD compatible. The most popular accounting software globally is without doubt Sage, although if your business is affected by MTD and you’re a Sage 50 user working on version 23 or below, you are likely to be contacted by Sage, letting you know that from April 2019 the only version of Sage that will be compliant for VAT filing will be Sage v24 and that you need to upgrade.
NCC ITS is a Sage Business Partner and can offer quality advice and guidance for businesses affected by Making Tax Digital, and we can also provide you with competitive quotes for Sage upgrades. If you’re interested in finding out more contact us today on 028 3026 5600 or send an online enquiry.