What You Don't Know About Making Tax Digital

With Making Tax Digital for VAT rolling out on April 1st for eligible businesses, it’s important to stay up to date with what will affect your business.

What you already know is that if you have a turnover of £85,000 and currently pay VAT, you will be required to start filing taxes digitally on HMRC compliant cloud based software such as Xero.

However, here are some lesser known facts to think about when it comes to the new change that might help you to understand more about it.

You can keep your spreadsheets

Just because you’ll need to keep your financial records online, doesn’t mean you need to scrap all offline documents. You can continue to update any other records you have so long as you ensure they’re also being updated on whichever online system you choose to use.

However, the introduction of making tax digital is to help eliminate the need for systems such as spreadsheets and to save time updating them when the same information can be put straight on the new system. It’s worth thinking about if you find that you’re spending too much time on admin after April 2019.

MTD already began in April 2018

The MTD initiative was actually introduced back in April 2018 with a pilot that eligible businesses were able to use to prepare for the full rollout to all businesses in April 2019.

For businesses with more complex requirements the pilot was pushed back a few months to allow for HMRC to make suitable changes and fix any issues based on customer feedback.

This ensures that when all businesses will be required to use it, it goes off without a hitch.

The UK are not the first to do this

The digital approaching to filing taxes isn’t new. Poland initially led the way, introducing digital filing in January 2018 with many countries in Europe following their lead including Spain, Portugal, Hungary, France, Belgium and the Netherlands.

The UK are moving forward, as the world is expected to become reliant on digital software over the next few years. Making Tax Digital is designed to make life much easier for everyone involved; business owners and accountants alike, as well as HMRC.