Making Tax Digital - What Does It All Mean?
Posted on 4th October 2018 at 14:45
Making Tax Digital (MTD) is HMRC’s attempt to fully take UK tax into the digital world. In effect, all our individual and company tax liability will be nudged electronically to our personal tax account (PTA) with HMRC.
Originally scheduled for a date already long gone, HMRC now aims to have all unincorporated businesses with turnover above £85,000 filing their VAT returns online from April 2019.
When MTD is fully implemented the intention is that it will no longer be necessary to submit an annual self-assessment tax return, with summarised accounting data uploaded on a quarterly basis.
This data can be revised annually, confirming that all is present and correct. Although the idea is for easier and more accurate data to be collected, it’s worth noting that the added expectation of four quarterly uploads instead of just one annual submission could be a real downside to some.
HMRC’s track record isn’t the best when it comes to the smooth rollout of new initiatives, so at Moulds & Co Accountants we are preparing early and getting ready to face whatever challenges arise.
Clearly, MTD is going to be a major change, for HMRC, business owners, professional advisors and taxpayers in general.
In fact, it will be the most significant change in the UK tax system since the introduction of self-assessment many years ago. However, the elimination of postal submissions is surely long overdue and we’re looking forward to (hopefully) a new and more efficient system.
HMRC has indicated that affected taxpayers will be able to upload data via spreadsheets as well as from specifically written accounting software, such as Xero or QuickBooks.
In our Wetherby office, our favourite cloud accounting software is Xero.com. We use Xero ourselves and we have lots of clients already using it so we really understand how it can be used to meet the HMRC digital requirements.
So, can HMRC really deliver a solid platform for Making Tax Digital? Based on previous experience, confidence is not high with system errors and countless hours spent on the phone to be expected. However by preparing early and being proactive we’re hoping to make the transition as smooth as possible.
If you’re a VAT registered business and are unsure about how to get your business ready, then we’d be happy to help.
How we can help
At Moulds & Co Accountants, we can help you through the MTD transition with personalised and professional tax advice, ensuring a cost effective and successful transition into the world of digital tax. Ensure that your business is compliant and ready to go by calling our experienced accounts team in Wetherby on 01937 584188 today.
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