Everything You Need to Know About Making Tax Digital

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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.

It is never enough to just ask clients about business health. Insufficient knowledge always leads to poor decisions. An accountant should explore a little deeper and inquire about clients business operations, including process flow, the employment process, procurement, customer base, ability to expand and resources available to invest in new equipment and emerging technologies. Only by researching more deeply into a business, an accountant truly is set forth to add value.

Business owners normally would not allow external accountants to engage themselves in business. But as the times have changed, finance directors find it more useful if accountants get involved in business planning and forecasting. Financial Management is highly dependent on the understanding of business operations in sales, marketing, production, operations, administration, human resources, and finance. Any accountant who has got this understanding can then demonstrate the financial implications of their decisions and actions to non-finance business owners and managers.

Businesses do not claim enough R&D tax credits. Too many business owners are unaware that they may qualify. Too many accountants miss opportunities due to a lack of understanding of their client’s businesses. By gaining better experience, an accountant can identify potential R&D tax credit claims. If you’d like to speak with an accountant who will take the time to get to know you and your business and work collaboratively with you to achieve better results, please contact us.

Modern-day accounting firms have become aware that without having business analysts and advisory services, options to increase client base is very limited. Business, on the other hand, do not want to hire a third party business advisory service to look at financial savings and improve profitability. It would work both ways. As Tax Accountants, our job is more extensive as every penny saved will save you more in tax.

Besides that, an accountant who is familiar with your business can help you save money on taxes. Suppose your accountant is not familiar with the day-to-day operations of your business, the nature of your work processes, procurement, billing, and cash collection. In that case, they will be unable to provide you with the support and advice you require. It is critical to understand the activities and relationships of all trading companies when you have more than one.

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