Mak­ing sense of Mak­ing Tax Dig­i­tal

Belfast Telegraph - Business Telegraph - - News -

Mak­ing Tax Dig­i­tal (or “MTD”) is the big­gest change in tax ad­min­is­tra­tion in re­cent years and will af­fect ev­ery busi­ness in the UK. Un­der MTD busi­nesses will be re­quired to main­tain dig­i­tal ac­count­ing records and to use these to sub­mit re­turns to HMRC. The ini­tial fo­cus will be on VAT but this is ex­pected to ex­pand to other taxes in the fu­ture.

Who does MTD ap­ply to and when does it start? MTD will ini­tially ap­ply to all busi­nesses with turnover greater than the £85,000 VAT thresh­old. The com­mence­ment date for sub­mis­sion of VAT re­turns un­der MTD is 1 April 2019. HMRC has plans for MTD to be ex­panded to re­quire busi­nesses to sub­mit in­come and ex­pense re­ports on a quar­terly ba­sis – this will not be un­til 1 April 2020 at the ear­li­est.

What are dig­i­tal records? A dig­i­tal record is a record of data for each trans­ac­tion of the busi­ness. HMRC are aware that many busi­nesses cur­rently use spread­sheets to record their data and have con­firmed that this will be an ac­cept­able form of dig­i­tal record pro­vided it is in an MTD com­pli­ant for­mat. How­ever, while this may sat­isfy the ini­tial re­quire­ments it is likely that as MTD ex­pands that most busi­nesses will be re­quired to in­vest in more com­pre­hen­sive third party soft­ware.

How does this im­pact on busi­nesses? If busi­nesses are al­ready use ac­count­ing soft­ware that is or will be ‘MTD com­pli­ant’ then they will not need to un­der­take any fur­ther ac­tion. How­ever this will not be the case for many busi­nesses where soft­ware may not be com­pli­ant, man­ual ad­just­ments are re­quired or there are more com­plex ac­count­ing sys­tems in place.

Un­for­tu­nately, there will be a cost to tax pay­ers and in­creased pres­sure on both ad­vi­sors and clients to meet the new re­port­ing re­quire­ments. How­ever, the changes will help to im­prove the qual­ity of record-keep­ing for busi­nesses, re­duc­ing the like­li­hood of mis­takes and help busi­nesses to man­age their af­fairs more ef­fec­tively and on a timely ba­sis.

How can ASM help? ASM Char­tered Ac­coun­tants have a range of so­lu­tions for deal­ing with the tran­si­tion to MTD and have in­vested in a range of MTD com­pli­ant soft­ware that can be used by busi­nesses of all sizes and com­plex­i­ties. These so­lu­tions can be tai­lored to your busi­ness’s needs and with of­fices in Belfast, Newry, Magher­afelt and Dun­gan­non we are close at hand to help you to make the smooth tran­si­tion to dig­i­tal ac­count­ing.

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