Don’t stick your head in the sand! Prepare for making tax digital. #MTD
It’s going to be one of the most radical events in the tax world since the Window Tax was first imposed in 1696! Yet many businesses are acting as if Making Tax Digital (MTD) has been kicked into the long grass!
As Tax Return Accountants, we thought it was time to have an update on HMRC’s campaign to make us all file our tax returns online.
A slow roll-out for MTD
It’s true, MTD is slow in coming. HMRC’s plans to become the most digitally advanced tax administration in the world has taken a bit of a knock thanks to the extra workload placed upon staff by BREXIT and delays in having the technology in place to impose MTD! HMRC announced earlier this year that the aspiration to transfer completely to MTD by 2020 won’t happen.
However, there are several reasons why businesses should not ignore MTD.
Firstly, anything that makes life easier and cheaper for HMRC will probably happen sooner or later! After all, MTD is still due to be rolled out for all VAT registered businesses with turnover over the VAT threshold for April 2019, and for income tax, and Corporation tax from April 2010.
Secondly, MTD offers a number of advantages that businesses should embrace:
- Paying quarterly avoids a big lump sum sitting in your accounts for long periods, and the temptation to spend it.
- MTD will help ensure every business keeps on top of its book keeping and accounting practices. (And, from our experience, that’s a good thing!)
- Businesses can enjoy the extra functionality of accounting software, especially Cloud-based packages, for producing real time financial information to support key decision making, what can be accessed anywhere in the world, with an internet connection.
- Doing things on a computer is quicker and easier, honestly!
The downside is that MTD will mean more frequent contact with HMRC, which can be scary, and will over time inevitably make new demands on business; Government initiatives often do!
What should I be doing to prepare for MTD?
The first thing to do is to adopt a change in behaviour. It will become important to stay on top of your book keeping if you’re to file returns every quarter, and maybe the days of customers coming in to the office with 12 months-worth of receipts will finally come to an end.
Then you should be thinking about converting your current book keeping and accounting systems to a software package approved by HMRC. The government offers guidance here.
That doesn’t just mean recreating your hard copy ledgers onto an Excel spreadsheet. You need to choose and start using a professional accounting package such as Xero, QuickBooks Online or Sage One. You’ll also need to train your staff to use it, or employ a qualified book keeper and/or an accountant to help you.
In summary, we need to start working as though MTD is going ahead on time and avoid a last-minute rush. Our advice as Tax Return Accountants, to clients is to get into best practice now.
Need help with MTD?
If you’re not sure what MTD means for your business but don’t want to miss out on the potential benefits, give us a call, we’d love to give you the benefit of our advice to make sure you’re ready and compliant.
We also offer a software installation and training service and can advise on the best accounting software package for your business.
If you can’t face the thought of having to file tax returns every quarter or your long-suffering spouse/book keeper really doesn’t want to learn how to use new software, our experienced book keepers at Black and White Accounting are happy to do it for you.
Either way, to find out more about how we can help you, contact Black and White Chartered Certified Accountants today, or call us on 0800 140 4644.