aking Tax Digital is the government’s plan to make it easier for individuals and businesses to calculate and submit their tax liabilities to HMRC. It will mean the abolition of the annual self-assessment tax return, to be replaced with a real-time personalised digital tax account. The first businesses will be required to convert to the MTD system by April 2019. Therefore it is vital that small businesses begin planning for the change sooner rather than later.
What the changes mean:
More efficient information sharing. Businesses and individuals will no longer have to give HMRC information they already have, such as PAYE data and bank interest received.
Real time Tax – HMRC will calculate a tax liability on an ongoing basis based on the information they have at the time, meaning you do not have to wait until after the year end to find out how much tax you have to pay.
Digital Record Keeping – crucially, businesses will be required to keep digital records of their information on accounting software which can link directly with HMRC systems, in order for HMRC to accurately calculate the real time tax liabilities.
Businesses who are already using cloud accounting systems for their book-keeping and payroll are already ahead of the curve and will be well placed to transition into the MTD way of taxation. However, any business who is still keeping paper or spreadsheet records or using off-line accounting software, will now need to start planning for how their records will be digitalised and connected to HMRC.
In preparation for the MTD transition, we are going fully on-line from October 2017. Using market leading tax software, we are already connected to HMRC’s systems for personal tax, meaning automatic retrieval and verification of personal tax data. We are also moving all record keeping onto Kashflow, Xero, Quickbooks, Freeagent or any other cloud software suitable for the client.
We can seamlessly digitise your paper and off-line records for you and hand back control of your record keeping to any extent that you are comfortable with. The future of business record keeping is here and digital record keeping will form the basis of all key management information and strategic planning for all businesses.