Going Digital or making tax digital (MTD) as we now know it. Most people will have heard about this requirement by now and may be wondering if it’s ever going to happen. The answer is that it is still going to happen but later and more slowly than originally planned.
What is it?
Basically using computerized accounting systems including excel, on any device (pc, smartphone, tablet etc) instead of paper records. Eventually reporting tax periodically via the internet to HMRC instead of just once a year.
Is this a good thing?
After some pain it could well be an opportunity as you find you have information about your business far more quickly than you used to so can actually use it to keep track and make supported business decisions. There is a lot of technology out there to be taken advantage of that you may never have otherwise bothered with.
Why are the government doing this?
HMRC say Making Tax Digital is… transforming tax administration so it is:
• More effective
• More efficient
• Easier for taxpayers to get it right
When do we have to do it?
• From April 2018 there is a pilot which is voluntary to join
• From April 2019 VAT only
• From April 2020 Income Tax and Corporation tax
How can I start to prepare?
Set up your ‘Business Tax Account’, consider what software you are going to use and sign up to a free trial which most software houses will offer.
And do remember to get support from your accountant!