Everything You Need to Know About Making Tax Digital
Right now, huge changes are taking place with the UK Tax System going digital. As a result, you will need to arm yourself with as much information as possible to make sure you get it right. You can use accountants Birmingham to help you setup Making Tax Digital VAT and Book Keeping submission. However, it will still help to know as much as possible before it becomes mandatory for your business.
Annual Tax Returns are Disappearing
The system aims to make the process of filing your returns easier than before. Therefore, you will be required to submit returns four times a year as a minimum via your digital tax account. This is not four tax returns per year but it is a case of providing regular updates.
Change has Started
VAT has already been a part of the changes and so, from the 1st April 2019, all VAT registered businesses are required to store and submit returns to HMRC using compatible software. Income tax is still being finalised but the change is coming.
You Will Need Software
It is no longer a case of providing spreadsheets and other forms of documentation as HMRC will expect your business to submit its financial information using compatible accounting software. While it will still be ok to use spreadsheets, they have to be able to connect to your digital account. So, you will need to invest in the right software that will enable you to adhere to the specific requirements set by HMRC.
Its always advisable to get advise from a professional before you start your journey by registering yourself for Making Tax Digital. We are here to help you and will setup your business ready for MTD.
Real-time Tax Updates Are Happening
Once Making Tax Digital is in place and running, it will mean that HMRC will have the ability to provide you with your tax position in real-time, providing accurate information that is up to date. This will help to avoid errors as well as tax due and over payments. Therefore, all of the information that you provide throughout the year will be collected and processed by HMRC. What this means is that you should have an instant figure showing you what you owe.
Don’t Go Digital and Face a Fine
Making Tax Digital came into effect in April 2019 for businesses although the first year has been known as a soft landing period. As a result, HMRC have given businesses time to put the correct digital link in place, ensuring that their digital software links up with the HMRC. If you fail to comply, there might be some circumstances where you are hit with a penalty, so it makes sense to follow the requirements and put everything in place.
As with most thing that have gone digital, the tax system in the UK is now following suit. It is the way in which the world is working and it should make it simpler for business owners to keep on top of it all and that is imperative when it comes to ensuring that they pay the right amount of tax. So, businesses will need to get compliant and ensure that they move with the times because failing to do so could see them facing significant penalties.