Making Tax Digital is an initiative heralded by the HMRC (Her Majesty’s Revenue and Customs) designed to make sure life is easier when sending tax returns back. At present, businesses, taxpayers and landlords send a yearly tax return to the HMRC (usually in January). Self-employed workers also submit the same returns.
The information consists of National Insurance and Income Tax data and any claims for tax exemption by self-employed persons on items purchased. But how is this all likely to affect accounting?
A business that is VAT-registered and has a threshold above £85,000 must comply with the new initiative from April 1, 2019. This is the first day of the new financial year and is months away, rather than years.
Digital records must be kept and submissions must be sent to HMRC via compatible software. So, if you don’t already have the software in place, the business and accounting teams will need to make sure it is ready soon.
Making Tax Digital Will Be Effective
For starters, tax recording will be a lot more accurate, providing for fewer omissions and errors. Miscalculations and especially fraudulent activity will be greatly reduced, if not eradicated. The entire process will be a lot easier and effective following submissions to HMRC.
The entire process will be faster and easier for business to submit VAT returns. At present, returns for Income Tax and Corporation Tax have been put on hold. These components of Making Tax Digital will be implemented in around April 2020.
It is designed to make things quicker and easier for the businesses and HMRC alike. The compatible software for Making Tax Digital is available from BTCSoftware. It has a solution for enabling agents to validate and submit VAT returns data in a way that is compliant with the HMRC demands.
The software will provide information like previous accounting templates never did before. It will show MTD VAT payments and a history of all refunded items purchased by self-employed taxpayers.
Will It Affect the Current Spreadsheets I Use for Tax Returns?
BTCSoftware Solutions has made its MTD-compatible software friendly for spreadsheet users. Importing data from one platform to the other will be seamless, irrespective of the software spreadsheet formats you currently use.
The software also integrates easily with a number of accounting tools and software currently in popular use. This includes Xero, QuickBooks, Reckon One and Free Agent.