Digital tax revolution – latest news
Whether you're a sole trader or a limited company owner, it's likely you have heard mention of the government's 'Making Tax Digital' initiative (MTD).
The goal is to transform Britain's tax administration into the most advanced in the world by introducing compulsory digital recordkeeping via cloud-based software platforms.
Last month HMRC announced that many of its digital plans are being shelved to free up time to work on Brexit projects. But these delays relate mainly to individual tax payers – VAT-registered companies and sole traders will still be required to make major changes over the next two years.
In its notice HMRC stated: "We have made the decision to delay plans to introduce further digital services for individuals, to release project capability to EU Exit work."
So it's full steam ahead for businesses – but what will MTD actually mean?
The ultimate aim is that all financial information will be uploaded online, making it available in real time and easily accessible for HMRC, business owners and their bookkeepers or accountants. It's hoped this will lead to a more transparent, efficient and accurate system, essentially streamlining the current process which usually involves manually inputting information from spreadsheets to tax or VAT returns.
From April next year, all VAT-registered businesses will have to start using the new system for VAT returns, and we're busy researching the best software packages to meet our clients' requirements. In some cases this might mean 'bridging' software, which will enable information to flow from a spreadsheet to HMRC online.
While there will undoubtedly be some initial cost to companies as they switch to new software, there should be administrative savings in the long term once the new system is up and running.
New pilot scheme announced for income tax
If you'd like to get on board early with the MTD revolution, you may be interested in joining a pilot scheme recently announced by HMRC. This is an income tax scheme available to the self-employed, allowing users to file quarterly updates of their trading income and expenditure figures online, in place of the annual Self Assessment return.
Find out more on the HMRC website here.
Plan ahead with AMR
Navigating the latest digital developments can be a major headache for many businesses. But with the right advice from knowledgeable experts, it doesn't have to be a fraught journey.
Here at AMR, we have years of experience helping our clients to adopt the very best processes, and we're ready to embrace MTD as a new opportunity that will further streamline our bookkeeping services.
If you'd like to discuss how we can help your business prepare for MTD, drop us a line via our contact form
and one of our team will get straight back to you.