Making Tax Digital is just weeks away - are you ready?
By: James Shipp Date: 15 February 2019
There are now just weeks until one of the biggest changes in the way businesses interact with the tax man comes into effect – and for many, the change will be a big one.
Under the government’s ‘Making Tax Digital’ (MTD) initiative, from April most VAT-registered businesses with turnover above the registration threshold will have to submit their VAT return, using proprietary, computerised software.
I know plenty of businesspeople who enthusiastically embrace technological solutions, but who remain wedded to the familiar, tried-and-tested way of keeping their accounts. Perhaps there is a feeling of ‘if it ain’t broke, don’t fix it’; or concerns about the amount of effort involved in learning something new; or even that the new system comes with a slight element of ‘Big Brother’.
After the introduction of GDPR last year, businesses might think that they are facing a tidal wave of new regulation. But just as sensible enterprises used GDPR to use data better for the benefit of their business, MTD should be viewed not as a regulatory burden, but as an opportunity to improve your business.
There are many benefits to cloud accounting: having up-to-date information at their fingertips can transform the way entrepreneurs plan and monitor the progress of their businesses. That information will be more accurate, timely and accessible than with traditional record-keeping methods.
The flip side to that ‘Big Brother’ concern is that we may see fewer HMRC tax inspections with the new system, HMRC will be more confident that the information behind business’ returns is accurate. Any company which has experienced a full VAT inspection will know just what a time-consuming hassle they can be.
The best way to comply with the new MTD regulations, is via a subscription to a proprietary cloud accounting software. If HMRC introduce more new regulation in the future, by subscribing to the software now will help to future proof your business.
More importantly, it will ensure you have the best tools to run your business – as well as saving your valuable time inputting data. Remember this technology also allows your business advisers to give better quality advice, because it is based on the most accurate, up-to-date information.
It may be that MTD is the piece of red tape which forces many businesses to move to cloud accounting; I’m pretty confident that the vast majority will look back in a year and be glad they made the move.