HMRC is rolling out its new initiative from 1st April 2019 with MTD for VAT. The UK government has designed this scheme to ensure that its tax system is effective, efficient and seamless for their taxpayers, are you ready for the changes?
Making Tax Digital will ensure that all VAT-registered businesses with a turnover above the VAT threshold of £85,000 are required to provide an electronic submission to HMRC using accounting software that’s compatible with MTD. This initiative will enable the government to digitise the entire tax system and support businesses and individuals to file their tax accurately with ease.
The following are some of the benefits that businesses will enjoy as a result of MTD:
- Access to Real-Time Information
MTD will give an overview of real-time information and allow you to see your accounts’ current state at any time of the year. This will enable you to understand the amount of tax that you owe the government and forecast correctly as a result. This reduces the chance of receiving a surprising tax bill. If your tax liability is more than expected then you can find ways to reduce this by planning your tax in advance.
- Quick Submission of Data
Through tax digitalisation, you will only need to input relevant information that you are aware of – instead of struggling to remember details. For example, under the expenses section of your returns, information on any claims can be entered together with the images of the physical receipt using the dedicated accounting software. Through this process, there will be no duplicate expenses, errors on claims or even the hassle of having to search for evidential documents some months later.
- Reduced Errors
This is also one of the greatest benefits of Making Tax Digital. Since you will be filing your tax information regularly, the chances of doing so accurately are greatly increased. You also reduce the risk of losing vital data because you won’t wait for the need to wait for a whole year to process it. The accounting software will calculate your figures for you, giving you the confidence that you can never be over-taxed or under-taxed.
- Less Paperwork
Another great benefit of the new system is a reduction in paperwork. Since the tax system will be digitalised, the amount of paperwork needed to be completed will be reduced significantly. Even though there will still be receipts, the majority of records will be stored digitally. The accounting system will allow you to submit your documents through scanning or capturing images. MTD will allow you to view all of your accounts in one place. You should use a Making Tax Digital software that is easy to navigate and ensure that your team have been trained using the interface.
- Access to Financial Data Anywhere
Using an accounting software that is compatible with Making Tax Digital is much more flexible than the traditional desktop software that is installed on one computer. The accounting software can be accessed through any web browser. This, therefore, gives you the opportunity to access your financial information from wherever you are provided that you have an internet connection. You can access your financial information from a mobile phone, laptop, or tablet using a browser or an app. Since you have this ability at your fingertips, you can make quick decisions regarding your business or handle any issue that might arise quickly.