Making Tax Digital Ready
Making Tax Digital (MTD) is here and is now live. Below is an excerpt from an Article in Accountancy Age explaining the level of unreadiness for MTD from an ICAEW report, the full report is in the link below.
“Only 54% of VAT registered businesses use the accounting software, but 25% of all businesses rely solely on paper-based records – this includes 13% who will need to implement MTD for VAT by April 2019.” Accountancy Age Emanuele Hawker Sept 2018.”
Panning out from MTD for a moment there are some wider issues to consider.
MTD is part of the wider HMRC digital strategy to change the way individuals and businesses interact with the HMRC. The HMRC feels it must change to embrace the digital revolution and provide better digital services. The link below details their vision stated in 2014 and beyond.
So as this strategy starts to become a reality, change also becomes a necessity with VAT being one part of that overarching strategy.
Cloud accounting software is available now which is MTD compliant and should be adopted wherever possible. Those businesses that are in the cloud, will find future changes easier to adopt by using compliant software and keeping digital records.
Other reasons for using MTD compliant software are as follows: –
For the Accountancy Practice:
- It streamlines a practices VAT reporting process and saves you time.
- In turn this reduces the cost to you as a practice, as you can process VAT returns quicker freeing up your staff to do other duties.
- There will be a reduction in effort required to create your client return and your staff will be happier.
- The quality of your client return is improved using digital records within a cloud accounting system to substantiate the return, rather than using paper records.
- Risk of an incorrect submission is greatly reduced using MTD compliant software compared to manual filing using paper and spreadsheets.
- You can avoid the hassle of having to create a bridging solution or verifying all the client’s digital links comply with HMRC regulations, using MTD compliant software.
- Any future changes to MTD VAT requirements will be easier to deal with using MTD compliant software, with software platforms being more likely to produce regular updates to maintain VAT compliance for their software.
- More time becomes available to be that business advisor your clients need.
Please see the link below for solutions inside and outside of cloud accounting platforms, that the HMRC have validated as alternatives for VAT submissions.
For the Business:
- Access to real-time business performance using cloud accounting software.
- MTD compliant software ensures, digital record keeping is used to submit the VAT return and compliance becomes easy.
- Use this opportunity to venture into the cloud and harness better ways of working outside of MTD for your business operations.
- Most MTD compliant platforms also have mobile apps and can help you to create a more productive workforce.
- Use this opportunity to gain visibility of your data within your company and start to make data-driven decisions.
- Gives you more time to listen to your customers and provide better products and services.
If you are practice owner that is still to transition to the cloud, or a business owner who is keeping paper records then please bear the following in mind:
The digital revolution is upon us and as practice owner when you come to exit from your business and realise the value you have built up over the years, which business do you think will be worth more, the one in the cloud or one which isn’t?
If you are a business owner using paper records, it is going to become more difficult for you to comply, as the HMRC strategy is rolled out and future digital submissions are required in addition to VAT. Corporation Tax and Self-Assessment digital adoption is estimated to be required from April 2021.
The soft-landing period for VAT ends on 31st March 2020. This doesn’t mean that companies won’t be fined until this date, fines can happen now post 1st April 2019, for VAT registered businesses over the threshold when their first VAT submission is due.
At SimpleInsight we will help you take that first step using MTD to explore what is possible for your practice or business in the cloud. How about moving to the cloud to relieve your anxiety ahead of the next VAT deadline, knowing you are using MTD compliant software and safeguarding your future.