Making Tax Digital

Angela Haig from EQ Chartered Accountants gives us an update on the new guidelines on Making Tax Digital from HMRC.

With so much political uncertainty in the country it is understandable that businesses feel nervous of more changes. It therefore comes as a relief that the Treasury have decided to delay the proposed timescale for Making Tax Digital (MTD) imposing changes to record keeping and reporting to HMRC. What is certain though is that it will happen and the progress of digitalisation will not stop.

Having spent the last year thinking about how my business would cope with quarterly reporting for clients and how to persuade clients to give up that lovely handwritten cash book (yes a lot of people still use them) I have realised that technology is key. Yes, I agree that you cannot replace human interaction, and my clients want to deal with people not machines, but technology enables routine processes to be carried out more efficiently, freeing up time to advise on the important things.

Quarterly financial reporting, and more importantly analysis, should be embraced by all businesses. Cash flow can be better managed, trends identified and decisions are more informed. So even if it is not to be mandated by HMRC until 2020 you should start thinking about it now. Accounting software is evolving rapidly, particularly ‘cloud’ accounting software with direct entry from your online bank account and automatic posting of regular expenses. Combine that with scanned receipts and e-bills and you need never hunt through that box of papers again.

So if your business is VAT registered and your turnover exceeds the VAT threshold (currently £85,000) you will have to keep digital accounting records from April 2019. From April 2020 you will have to file quarterly reports electronically to HMRC for all other taxes, not just VAT. Smaller businesses will be able to join in voluntarily. As with previous moves to ‘online filing’, once the benefits can be seen I’m sure more businesses will join in.

Technology and real time information enables you to run your business better and when used in conjunction with advice from a good financial adviser I think we all have something to gain from Making Tax Digital.

If you require further information, or have any questions related to MTD or Cloud Accounting, please get in touch.

“Technology and real time information enables you to run your business better and when used in conjunction with advice from a good financial adviser I think we all have something to gain from Making Tax Digital.”