by Nick Robinson | Feb 28, 2018 | Accounting, Bookkeeping, Business, Business Planning, Business Tax, Excel Bookkeeping Spreadsheet, Personal Tax, Self Employed, Taxation, VAT
[et_pb_section fb_built=”1″ admin_label=”section” _builder_version=”3.22.3″][et_pb_row admin_label=”row” _builder_version=”3.25″ background_size=”initial” background_position=”top_left” background_repeat=”repeat”][et_pb_column type=”4_4″ _builder_version=”3.25″ custom_padding=”|||” custom_padding__hover=”|||”][et_pb_text admin_label=”Text” _builder_version=”3.0.74″ background_size=”initial” background_position=”top_left” background_repeat=”repeat”]It is a pandemic agreement that Making Tax Digital for business is the correct approach for the future. From April 2019, a new scheme will be introduced as a part of The Government Making Tax Digital (MTD), where businesses are required to use compatible software to submit digital information to HMRC. This means that some form of technological software or cloud accounting package must be used in order to connect to HM Revenue and Customs and submit the information to them. Making Tax Digital will help bring the tax system into the 21st century by providing businesses with a more modernized system to keep their tax records and provide detailed information to HMRC.
It is important to note that only businesses with a turnover above the VAT threshold which is currently at £85,000 will need have to keep digital records and only for VAT purposes. Also, this requirement still applies even if the taxable turnover of the business subsequently falls beneath the VAT registration threshold when the next set of information is needed. However, Making Tax Digital will be available on a voluntary basis for smaller organizations, meaning that businesses and landlords who have a turnover below the VAT threshold will have the ability to choose when to move to the new digital system that will be put in place. An advanced tax system which is solely based on digital technology will make it much simpler for businesses to get their tax figures precise, meaning each business will have a clear view of their tax position each year. In addition, the new reforms will reduce the number of errors which will reduce the cost, as well as the uncertainty that businesses face when HMRC involvement is needed in an attempt to correct the situation, making the task less difficult for any type of business. If a new business is being set up, this is an important aspect that should be taken into consideration when the organisation is being set up because it will be much easier to get into the habit before the changes formally take place.
Conversely, many people argue that taxpayers may be at risk of overpaying as their returns are prepared for them by HM Revenue and Customs. However, this is not always the case and Making Tax Digital may benefit your business in multiple ways. If your records are all kept up to date, you will be able access the annual accounts produced much sooner than many cases. By doing this, businesses are then able to discover the exact amount of tax that is needed to be paid well in advance of when it’s due. Therefore, complying with Making Tax Digital will improve the planning of the organisation’s flow of money. Additionally, the software now available will complete this responsibility in a far quicker, and efficient way than ever before, which means that in the long term, complying with Making Tax Digital will save time.
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