Making Tax Digital

The changes under the banner ‘Making Tax Digital for Business’ (MTDfB) will affect all self-employed individuals who pay income tax, VAT and companies paying corporation tax.

 

Making Tax Digital

You will no doubt be aware of the significant changes HMRC are introducing to the UK tax system to bring it into the digital age.

Originally planned to commence in April 2018, the government announced in July 2017 that the start date would be put back to April 2019 in order to give more time for businesses to prepare. 

Under the new timetable:

  • Only VAT registered businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes
  • They will only need to do so from 2019 and will have to report quarterly to HMRC using a software package
  • Businesses will not be asked to keep digital records or to update HMRC quarterly, for other taxes until at least 2020.

Under the proposed scheme taxpayers will be required to submit quarterly returns within one month of the end of the quarter, with a final ‘end of year’ confirmation due ten months after the fourth quarter. 

Watch HMRC's introductory video for Making Tax digital below.



Given the difficulties some businesses may have adapting to the new reporting requirement, HMRC has confirmed that late filing penalties will not be applied for at least the first 12 months.

However despite this ‘generosity’ and the delay in implementation, make no assumption that MTDfB will not happen. The government has invested £1.3bn for HMRC to become the most digitally advanced tax administration in the world.

Now is the ideal time to think about how online accounting will benefit your business and ensure you have the right software in place when more frequently reporting to HMRC comes into effect.

From our extensive experience of working with many clients using online accounting software, two of the systems that we would strongly recommend are Xero and Quickbooks Online.  We can provide versions specifically tailored to meet the needs of your business and offer help with the initial set up and training.  Both packages will provide users with the required tools to manage their finances more efficiently and, used correctly, will give you an overall detailed up-to-date view of your business for better decision-making and enable compliance with the new reporting regulations.

Furthermore, online accounting software is available by monthly subscription saving you the initial outlay of the traditional desktop accounting software.  Both Xero and Quickbooks Online offers subscribers constantly updated systems which guarantee that you are always using the latest version.  Currently, Xero offers free conversion of two year’s worth of accounting data available to users of the desktop versions of Sage or Quickbooks.

Similarly desktop users of Sage wishing to convert to Quickbooks Online currently are also able to convert two years of accounting data into Quickbooks Online for free.  Or, for users of desktop Quickbooks wishing to convert to the online version, all your existing accounting data can be transferred into Quickbooks Online.

For more information or to arrange a free demonstration, please contact Martin Southern by email at mjs@morriscrocker.co.uk or tel 023 9248 4356.

You can also find more information at our online accounts page.

Read our online accounting case study

For more information about our services contact us on 023 9248 4356

 

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