What is ‘Making Tax Digital’?
This is a tax compliance initiative started by HMRC, with the goal of making the tax system more streamlined and efficient. No rules are necessarily changing, particularly concerning VAT, but the ways in which processes are carried out will be altered.
This process begins in April 2019 and all VAT registered businesses (over £85,000 per year turnover) will have to keep online records and submit their VAT returns using HMRC approved software. This is already recommended but this compulsory initiative will help to consolidate the practice.
It allows for more accurate data with less room for human error, as well as faster and easier accounting.
Digital Tax Compliance Consultation
Sidaways can provide a Making Tax Digital consultation and guide you through the process; our chosen accounting software (Xero) is HMRC-approved. It is easy to maintain compliance because, after a while, the process maintains itself and it also has advantages for your business.
How do I do this?
You can already apply for the beta, in order to get ahead of the rest and ensure that you are fully compliant before this coming April. Since July 2018, HMRC and Xero have been working on a private beta, which was then made public in October 2018, in advance of the compliance deadline. By April 2020, new Corporation and Income tax regulations will commence, meaning that these will also be recorded digitally. This marks the beginning of a digital shift in terms of taxes.
Here are some easy ways to ensure compliance:
- Make sure you’re always up-to-date with information about the new regulations. Ensure your whole team is aware.
- Communicate with your customers and clients about how you’ll be handling their information. It may be worth tasking certain people in the business with being knowledgeable about the digital tax compliance initiative. Doing so ensures that there is always someone to discuss any issues with.
- Plan ahead of time. That way, you are able to correct any errors and assess the best software to use.
- Employ external help or training. It’s a very niche area and it can often be beneficial to discuss the options with someone specialised in that area.
For more information or advice on Making Tax Digital, please feel free to get in touch with us. We’ll be happy to help!