Making Tax Digital For Businesses: Are You Ready?
Making Tax Digital (MTD) for businesses is the government’s latest initiative to digitalise the tax system, with the aim of transforming the way organisations submit their tax returns to make it a more efficient, effective and accurate process.
It is estimated that a total of £9billion is lost every year in tax revenue due to administrative errors, with businesses facing increasing penalties for genuine mistakes made. HMRC argues that an automated digital system will save businesses from being penalised and cut down on these errors.
From 1st April 2019, VAT registered businesses above the £85k threshold will be required to submit VAT returns via an online digital system. The requirements do not apply to VAT registered businesses with taxable turnover below the VAT threshold.
Moving forward this means there will be no more paper tax returns and all tax information will be stored in one place which can be accessed and updated in real time. Businesses will be required to use a cloud-based accounting software package (such as Xero and Quickbooks) to store their tax records, provide summary tax data quarterly to HMRC, and provide a finalised end of year position to HMRC.
For more information, contact your accountant or alternatively ring us today on 0161 828 8100.