Making tax digital – what you need to know
From small businesses to big multinational companies, the way tax is done is soon going to change. That's because HMRC is bringing in its 'Making Tax Digital' initiative, which will change the way tax returns are filed. The change means the annual tax return will become a thing of the past, with businesses required to submit information every three months.
Although that may sound like four times as much work, the reality is that businesses will be given a digital account which is linked to bank data. The account will pull in real-time financial information, helping to make the process as straightforward as possible.
The end of traditional software?
If you've been using desktop software such as Quickbooks or Sage, via spreadsheets or even without any digital records at all, it's time to either make the switch to accountants or the cloud. With the pilot scheme set to launch this month after several false starts, HMRC is now ready to go ahead. It's expected that businesses with turnover above the VAT threshold will be compelled to file quarterly VAT returns online from April 2019.
From 2020, sole traders and freelancers will also be expected to join. It means there's never been a better time to go digital. Ultimately it will make keeping an eye on your accounts much easier and you may even benefit from better business insight.
Whilst making the switch may seem daunting at first, it's worth bearing in mind that cloud accounting has a range of benefits including giving your business access to accounts on the go. That means no matter where you are, as long as you're connected to the internet, you can assess your accounts.
It also makes sharing data with your accountant much easier. Whatever you see, your accountants can see too, meaning you can receive timely advice based on financial information that's fully up to date. It also allows for better cash flow management and tax planning, which ultimately leads towards better business decisions.
For help in making the transition to digital be sure to contact our team, we'll be more than happy to answer any questions you may have.
If you have any specific questions about you, your business and digital tax please get in touch with our Tax Partner Robin Stevenson to discuss your position and whether we can help your business claim what you deserve.
Robin Stevenson - Tax Partner
Tel: 01825 763 366
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