Our conversations have ranged from the very basic “what is it?” to the “how does this specifically affect me and my business?” and more recently “is this ‘Making Tax Digital’ thing still happening in the wake of Brexit?”.
Making Tax Digital or MTD (which in this context doesn’t stand for Match of the Day) is a key part of the government’s plans to make it easier/more efficient for individuals and businesses to get their tax right (which is good news for everyone, right?).
This all stems from the fact that it’s estimated that the government has been losing out on £9bn in unpaid taxes just as a result of errors – which is contributing to a staggering Tax Gap in the region of £34bn (which it goes without saying could pay for an awful lot of extra services in the UK)!
In the beginning, the approach is reserved for VAT-registered businesses above the threshold of £85,000 – who will have to keep digital records and submit VAT returns using Making Tax Digital compliant software.
(The government has given assurance that it will only widen the scope of Making Tax Digital for Businesses beyond VAT to include income tax and corporation tax to name a few, when the initiative has been proven to work well, but not before April 2020)
The original date would’ve been from 1 April 2019 but recently HMRC has said that some organisations will now be allowed to defer entry for MTD for VAT until 1 October 2019.
The following types of organisations who are allowed to defer entry are as follows. • Trusts; • ‘Not for profit’ organisations that are not set up as a company; • VAT divisions and VAT groups; • Public sector entities required to provide additional information on their VAT return (Government departments, NHS Trusts); • Local authorities; • Public Listed companies; • Overseas-based traders; • Traders required to make payments on account; and • Annual accounting scheme users.
For now, if you aren’t managing the finances of, or running a company/organisation with a taxable turnover exceeding £85,000, then you probably don’t have much to worry about (yet).
Many businesses aren’t yet aware that it affects them and many more certainly aren’t prepared for managing their finances online or submitting returns to HMRC every quarter.
Put simply, this will require finance teams of all sizes to change the habits of a lifetime, if you use spreadsheets to manage your accounts, or hand paper records to your accountant every year, you’ll have no choice but to adopt a new MTD-compliant method. Even the largest finance teams with the most robust finance solution already in place will need to think about how they submit VAT and how this process needs to change.
How to prepare for Making Tax Digital? 1. Keep your records digital, according to MTD regulations. 2. Maintain records digitally in line with MTD regulations 3. Digitally send VAT returns containing/alongside information held within the software 4. Provide VAT data to HMRC where necessary 5. Access information sent by HMRC via an API platform
We have thousands of finance customers using applications from us every day and we have absolutely no intention of neglecting our customers, which is why ‘Making Tax Digital’ has been a priority for our product development team for some time. We have worked alongside HMRC to provide current and new customers with a solution which will assist their compliance with MTD.
So, in summation, when ‘Making Tax Digital’ becomes a thing, don’t worry, we’ve got you covered!
To learn more about how bluQube cloud accounting software can help you make tax digital, get in touch.
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