Making Tax Digital
Making Tax Digital ("MTD") is a key part of the government's plan to get individuals and businesses to keep on top of their tax affairs in a way that mirrors the digital age in which we now live.
This started with the introduction of personalised digital tax accounts with HMRC, who uphold their ambition of becoming one of the most digitally advanced tax administrations in the world. In 2021 at the earliest, HMRC will be asking for quarterly tax accounts including rental and self-employment if your income is >£10,000, for now it is impacting VAT registered businesses only.
Making Tax Digital for VAT
For all VAT periods which started on or after 1 April 2019 all VAT registered businesses with turnover above the VAT threshold (currently £85,000) are required to keep records digitally, and submit their VAT return information to HMRC through MTD compatible software.
This is changing the way many businesses go about their record keeping to ensure they have the required digital records and links into their VAT return. It is really important that our clients know whether this is a change that effects them and also to ensure that they understand the need to register on HMRC for MTDfV as well as be submitting your VAT return through your software.
We have seen a huge shift in the software on the market aimed at helping businesses with the transition. Although the majority of the existing software’s including excel have been updated or have add-ins to ensure they are now compatible with the new filing system. It is really important to us that our clients use a software they are comfortable with and meets their needs and so we have decided to support a large number of software’s rather than just selecting one and trying to make it fit all businesses.
We are in a great place to be able to assist your business, having pushed hard for two years to ensure our clients are ready we have the experience to make it as seamless as possible for you.
Cloud software is internet based. There are no installation CDs or downloads, accounting entries are entered through a web browser on to the “software”. Perhaps calling it software is somewhat misleading, as the user end is effectively a high-end website that adds the information you process into a database stored on a server.
So why has this become so fashionable? Simply put, it removes the limitations of geography. Your information can be accessed anywhere there is an internet connection, from a PC, smartphone or tablet. Your bookkeeper could be hard at work processing entries in the UK, and you could be lying on a beach in the Galapagos just ‘checking in’ to see how your business is performing. At least that is the idea! There are also some great time saving functions including linking to your bank to download all of your bank, loan and credit card transactions together with storing and reading digital invoices which can be emailed directly to the software. Some software’s can cut your preparation time by 50% yet provide you even more information.
We have partnerships with the main software providers, and our staff are fully trained and certified to help you migrate onto a system of your choosing. We can also assist in the preparation of reports so that you can have powerful information from the data, to keep you up to speed with the performance of your business.
If you would like to any more about how Making Tax Digital may affect you, or if you would like more information on cloud software, or are considering migrating, please do not hesitate to get in touch with Kate Bell.
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