9 August 2018
It is now August 2018, and it was originally intended that by now businesses would be submitting their first three monthly returns under the Government’s plans for Making Tax Digital (MTD), which was due to launch in the April just past. Thankfully, after a huge amount of pressure from businesses, professional bodies and even Parliamentary Committees, sense was seen and the plans delayed. MTD now starts in April 2019 for VAT now with the extended name of ‘Making Tax Digital for Business’ (MTDfB).
The government committed that it would not widen the scope of MTD beyond VAT before the system has been shown to work well; and not before April 2020 at the earliest. It would seem that less than a year is insufficient time to show that a system runs smoothly, but we would still expect the Government to introduce MTDfB for other taxes at that earliest point. It will certainly be their ambition.
As a reminder, MTD is intended to fundamentally change the way taxpayers and HMRC report and process accounting data. It will oblige the maintaining of business records in approved electronic forms and the submission of data to HMRC from that software via HMRC’s Application Programming Interface (APIs). Businesses will be required to submit their figures on a quarterly basis. From this point the tradition HMRC login portal will close and the information will have to be uploaded via HMRC’s API, and this has been lost on a lot of businesses that are still blissfully unaware of this change.
In some ways HMRC made an error in calling the system Making Tax Digital. This suggested some nuance. The reality is that they are obliging you to make your accounting systems digital, and this will apply for all businesses with a turnover above the VAT threshold from April 2019.
For many businesses providing quarterly figures could be difficult and could be quite a culture change.
Cloud accounting software can help simplify this, and help reduce the pressure and stress of collecting the data.
Cloud accounting can allow you to upload receipts as you get them simply by taking a photograph on your phone, and will automatically link to your accountant who can note it accordingly. The software will allow you or your accountant to easily pick out your income and outgoings for a certain period, thereby meeting the requirements of MTDfB and allowing businesses to concentrate on other matters knowing that this new admin task can be swiftly covered.
There is still a surprising high number of businesses that are unaware of the change and need to act now to avoid real disruption in just over six months time. Should you wish to discuss how converting to the cloud can help your business prepare for MTDfB, please do not hesitate to contact me or your local UHY adviser.