Most businesses don’t know you NEED to do this…
90% of UK businesses do NOT know exactly what “Making Tax Digital” is and what it means for their business.
We are here to help.
You may need to abide by HMRC’s new “Making Tax Digital” rules.
So,
What is “Making Tax Digital”?
Simply put, Making Tax Digital (MTD) is a HMRC campaign designed to bring tax into the 21st century by making businesses keep their financial records digitally and submit their tax returns via an MTD compatible accounting software.
Making Tax Digital will make the UK tax system more efficient and easier for businesses by:
Improving the quality of your business’ financial record keeping.
Reducing the time spent gathering and processing your financial records.
Reducing manual bookkeeping entries and tax errors.
Giving you peace of mind that your financial records are up to date and your tax returns are filed with HMRC.
Informing you how your business is performing in real time.
Who does “Making Tax Digital” apply to?
Making Tax Digital currently only applies to VAT-Registered businesses with a turnover above £85,000.
VAT-Registered businesses are required to keep their financial records digitally and submit VAT returns quarterly through MTD compatible software by April 2019.
If your business drops below the VAT threshold at any point after the 1st April 2019, you will still be required to abide by the MTD rules unless you actively de-register for VAT.
(Note: Not sure if you are ready for Making Tax Digital? Take this quick quiz to find out if you meet the new MTD requirements. Click Here To Find Out)
What does making tax digital mean for your business?
Well, if you’re a VAT registered business you will be required keep all your business’ financial records digitally via an approved accounting software like Xero, Quickbooks or Sage. You will also need to submit your VAT and end of year tax returns via your new software.
If you are not currently registered for VAT, you are not required to abide by MTD rules for the time being. HMRC plan to enforce MTD rules for ALL business tax by April 2020.
Can I keep my financial records on a Spreadsheet?
The simple answer to this is yes however, you will still need to sign up to a “bridging software” that allows your spreadsheet to be connected directly to HMRC.
In other words, there is no real benefit to keeping your financial records on a spreadsheet as you will still be required to sign up to MTD compatible software.
Are there PENALTIES for Making Tax Digital?
The simple answer to this question is NO, there are no penalties for not being Making Tax Digital ready however, not being MTD ready means that you will not be able to file and submit your VAT and other tax returns.
The penalties for MTD comes from not being able to file and submit your VAT and tax returns as there will be no other way to do this. Other old way of submitting VAT and tax returns will no longer be accessible.
(Note: Not sure if you are ready for Making Tax Digital? Take this quick quiz to find out if you meet the new MTD requirements. Click Here To Find Out)
