Making Tax Digital Timeline
Businesses who are over the VAT threshold (£85k) will be mandated to use the Making Tax Digital system for their VAT returns by April 2019.
Smaller businesses can voluntarily use the new system for their VAT returns during this time.
After April 2020 the Making Tax Digital system will have been fully tested and Making Tax Digital beyond VAT returns will be slowly implemented.
4 Foundations of Making Tax Digital
The Government is committed to ensuring they can deliver a modern digital tax system for all businesses and their agents. The next steps are
- Better use of Information
- You will no longer have to provide HMRC with information they can get from elsewhere, e.g. banks, building societies, employers.
- You will be able to see all the information HMRC holds and check the data is complete and correct.
- HMRC will then be able to tailor the service it provides depending on circumstances.
- Tax in real time
- You will no longer have to wait until the end of the year to find out how much tax you owe, which will help prevent errors or troubles with repayments
- A Single Financial Account
- By 2020 customers will be able to see a comprehensive financial picture of their digital account – similar to online banking
- Interacting Digitally
- The new system will enable you to interact with HMRC at a time that suits you, with personalised picture of the tax affairs, prompts, advice and support through webchat and messaging.
Watch this short video to find out what the VP of Intuit QuickBooks thinks businesses should be doing to prepare for Making Tax Digital (MTD).
Making Tax Digital and QuickBooks
QuickBooks is one of the leading cloud accounting solutions, and is ready for Making Tax Digital. In our opinion it is long overdue and will make it easier to manage taxes and not fill out so many forms.
If you are already using QuickBooks you will find it easy to transition as you will already be keeping digital records of your income and expenditure. You should have already become accustomed to frequently entering data into the software where it is complied and then ready for you to submit. QuickBooks also makes it easy by prompting you to add missing data, enabling you or your accountant to easily submit it to HMRCs digital tax system.
Small businesses will be able to test the HMRC digital reporting feature over the next few months and will be piloting certain digital accountants to manage their clients digital tax accounts this year.
By early next year you should be able to report secondary sources of income through your digital tax account and the roadmap is to update tax and national insurance contributions by summer next year.
The new system will make monitoring, calculating and paying tax easier, and at Orchard Accounting Solutions we will be helping you ensure you are up to date with all the information required for making your tax digital.
78% Adoption
78% of small and medium businesses in the UK have already adopted Cloud Accounting.
