Preparing for HMRC’S digital changes
Tom Penman, Tax Partner at Belfast-based independent accountancy and advisory firm, Baker Tilly Mooney Moore, examines the upcoming HMRC’S Making Tax Digital (MTD) project and asks if your business is ready.
“It seems like a lifetime ago, but back in 2015 the government announced its intentions to make tax return filing digital and, after a few delays, part 1 of the project is very nearly here.” explains Tom.
“The original plans have been watered down but for VAT returns with periods starting on or after 1 April 2019, VAT registered businesses with sales on or above the VAT registration threshold (£85,000), will be required to keep records in digital form and submit their VAT returns using MTD compatible software. This can now include spreadsheets, provided that additional software is used to make them compatible with HMRC systems.”
“There are very few exceptions to these rules and the vast majority of businesses in this category will need to comply,” added Tom.
According to Tom, HMRC believes that it is commonplace for accounting and business information to be stored digitally, and as such for many businesses the change will help speed up the VAT reporting process. But, he explains, in the finance world it is considered that far fewer businesses and even accountants are prepared for this change than HMRC seems to think.
“Businesses that keep their financial transaction information in written form and/or that are using spreadsheets, will definitely be required to make changes to their processes and could be the businesses most affected (although not exclusively) by the introduction of MTD,” he advises.
“In any case, the digitalisation of accounting information and tax compliance is happening regardless of whether businesses are ready for it or want it,” Tom continues.
“Whilst HMRC has still to formally confirm that the MTD will take place from April next year, the team at Baker Tilly Mooney Moore urges all businesses to ensure that they have a firm understanding of their current processes and a considered plan to ensure they are able to comply with MTD. Failure to do so could result in cost and disruption to the business, which, when added to the current uncertainty of future trading conditions, would be best avoided.”
HMRC is running a pilot programme which VAT registered businesses can apply to be part of before the full MTD goes ahead.
Baker Tilly Mooney Moore is a very experienced accountancy and advisory firm, renowned for its first-class customer service. With a specialist team of advisors covering everything from VAT and bookkeeping services to personal taxation and corporation tax, businesses using their services can ensure the incidence of taxation is minimised.
“Our expert team can review clients’ systems and advise on the most appropriate changes or software packages for them as well as provide advice on all aspects of tax,” said Tom.