Making Tax Digital – What is it and why is it happening?

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Making Tax Digital – What is it and why is it happening?

Making Tax Digital (MTD) is an HMRC initiative designed to make the UK tax system proficient, effective and simpler for all taxpayers. It’s set to roll out next April with MTD for VAT. This means that VAT-registered business over the £85k threshold will have to keep digital records to submit VAT returns.

 

We actually spoke about this not so long ago in our blog, ‘The General Data Protection Regulation Has Landed. Now What?’.

 

If you missed that blog then not to worry, let’s start from the beginning.

 

What is MTD?

Making Tax Digital will ensure everyone manages tax and personal information easier.

MTD is part of the government’s plan to simplify the process for individuals and businesses on getting their tax right and to help them keep on top of their affairs. Streamlining the process through making tax digital is thought to be the solution!

 

“Every individual and business now has access to their own personalised digital tax account and these are being regularly expanded and improved.” – GOV.UK.

 

As we mentioned, it’s set to roll out next April with MTD for VAT. Other components of MTD, including income tax and corporation tax, has been placed on hold until April 2020.

 

Why the change?

HMRC’s ambition is to modernise their tax administrations and make it digitally advanced.

 

You will not have to give HRMC information it already has or can gain from elsewhere. Digital tax accounts will give customers more control and power, whilst allowing them to see the information that HMRC holds; you’ll be able to check these at any time.

 

What we think of MTD

MTD will renovate the tax system and make HMRC the world’s most advanced and efficient tax administrations. For us here at Jackson Accounts we praise the move. It means that tax will be easier than ever and will allow us and businesses to spend more time on key business functions and less time arranging tax.

 

We foresee that the change will:

  • Mean less errors in VAT returns with digital records.
  • Help clients to meet their new MTD for VAT obligations.
  • Provide a practical service with easy access to live client data.

 

It’s a great opportunity for us accountants & bookkeepers, and of course, all business owners too.

 

No urgent action is required for now, but it’s something that you should be thinking about for your business.

 

We understand that change isn’t always easy, but Making Tax Digital isn’t something to fear, it’s something to embrace. It may be a daunting prospect, but it is a process which should help you more than anything by reducing your workload.

 

Got some MTD questions?

Whatever the question, get in touch and we’ll be more than happy to answer them for you!

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