Is your business ready for the important changes coming in 2019? Find out everything you need to know about HMRC’s Making Tax Digital initiative, including what you need to do next, and what the new system will mean for your business.
What is Making Tax Digital?
Making Tax Digital (MTD) is a drive by HMRC to modernise the tax system used by businesses and individuals in the UK. As the name suggests, the plan is to make tax records and accounts digital-only, rationalising financial data into one single place that’s easily accessible online, and giving customers up-to-the-minute access to all the information held in their accounts.
Making Tax Digital for Business will help business customers handle their taxes more efficiently, streamlining the entire process so that the digital records required by HMRC can be generated and transferred directly from your accounting software. Once it’s implemented, this will be good news for your business; it’s likely to save you time and resources by automating your accounting and making all your financial data available in one single place.
When will it be introduced?
The first key date is April 2019. By this time, any VAT-registered business earning over the £85k threshold set by HMRC will be required to handle their VAT returns digitally.
This will be followed in 2020 by further requirements for companies to deal with their income tax and corporation tax using the Making Tax Digital platform.
Do I need to act?
Yes, it’s important for businesses to be ready for the change. If your current accounting software is compatible with the new requirements it may simply be a question of talking to your provider and introducing new processes within your company. If not, now is a good time to consider making the switch to a more suitable, cloud-based accounting software provider.
Action points for accounting practices
If you run an accounting practice, there are some important considerations to make.
- Review your client base. How many clients do you have and what software is being used?
- Are they currently on the right platform in order to be compliant? If they’re on systems such as Sage 50 or Exchequer, Sun Accounts, Access Dimensions or Sage 200, now is the time to decide if they need to move.
- If not, which software would deliver the best return on investment? Consider switching to AccountsIQ, which is integrated easily with systems such as AutoEntry for easy data collection.
Action points for Finance Directors
If you currently work with an older accounting system or one that’s not cloud-based, ask your provider if they are MTD ready. If not, ask how they are looking to ensure they meet the deadline.
Consider the following:
- How is this going to impact my business?
- How can I evaluate which software will suit the needs of my business?
If you’re not confident that your current provider can meet your needs, get in touch to find out if AccountsIQ is right for you, and read about the key features of our cloud-based accounting system. AccountsIQ enables companies who have Group VAT registration to submit consolidated Group VAT returns.