Is your business ready for Making Tax Digital (MTD?)
Annabel Barnes • 2 September 2021
HMRC are introducing significant changes to our tax system in order to meet their goal of becoming the most digitally advanced tax administrators in the world. To help them succeed in this venture they are making the system less confusing for people and ensuring that it is as efficient as possible.
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In the background HMRC have been working with businesses who volunteered to assist with their research, carrying out intensive live testing in order to create the processes for Making Tax Digital (MTD)
What does this mean for VAT Registered businesses?
MTD came into effect for businesses who exceeded the VAT threshold back in April of 2019. Businesses who are registered for VAT or those who are voluntarily registered for VAT should already be following the new processes.
What does it mean for MTD for Self Assessment customers?
From 6th April 2023, if your income exceeds more than £10k per year, you will need to meet the rules of MTD for your next accounting period following this date.
Why has MTD been introduced?
HMRC were coming across far too many ‘human errors’ they reported that between 2018/2019 tax errors cost the Exchequer £8.5 billion! MTD will resolve this issue by encouraging businesses to upgrade their software and become more efficient using the latest innovative technology. This will mean that businesses who are still using spreadsheets for their bookkeeping, will no longer be able to do so, therefore eliminating human error. It may seem like it’s more effort for people making the switch but it will make your bookkeeping more streamlined and efficient in the long run.
Will I have to invest in new technology and Software?
You will be required to use MTD compatible software, but it doesn’t have to mean a big investment of cash. There are more advantages which outweigh the investment, by introducing new technology into your business you will be making your business more efficient and in the long term save your business money.
To find out if your current software is compatible then visit this link to the government website...
At Bluebells Bookkeeping Ltd all the accounting software we use is MTD compatible, examples such as Xero and Quickbooks (to name but a few). We are also QuickBooks Pro Advisors for MTD so if you’re not yet set up on any software or you’re thinking about making the switch, get in touch and we can have a chat to discuss your options.
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