Blog
What is Making Tax Digital?
- By Ines Curtis
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- 19 Jan, 2018
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Making Tax Digital is a bold step forward with the ambition to make the HMRC’s the most digitally advanced administration in the world! The goal of Making Tax Digital is to make the tax process more effective, efficient and easier for taxpayers to get their tax right.
For us to take this step forward into the world of digital tax there are a few key changes businesses need be across to ensure they comply with the regulation.
Important Dates To Remember For Making Tax Digital
From 1 April 2021, the regime will be extended to income tax and corporation tax. This will be a significant change for many small businesses. Manual records and most spreadsheets will no longer be able to be used.
What does this mean for you?
All businesses will need to review the way they keep their accounting records. HMRC require that all businesses maintain their records in a digital format. A commercial provider of software that is compatible with MTD will need to be used.
You’ll need this software to keep records of income and expenses. If you’re already using software to keep records, check with your provider when the software will be ready to allow you to submit returns to HMRC compliant with MTD.
The functional compatible software required from the software providers is a software program, or set of software programs, products or applications, that must be able to:
- record and preserve digital records
- provide to HMRC information and returns from data held in those digital records by using an application programming face (API) platform
- receive information from HMRC via the API platform
If you account for VAT using the Flat Rate Scheme, special rules apply:
- you keep a digital record of the sales invoices
- you do not need to keep a digital record of your purchases unless they are capital expenditure goods on which input tax can be claimed
How we can help?
At Quest Duthoit, we understand the change to MTD might require you to make some changes to your current business processes. We are trained in all elements of MTD and can support in any of the following ways:
- We can help you find a cloud solution
- Submit quarterly submissions to HMRC
- Training for your team
Starting your own business is a very exciting stage of your life. It’s a time full of opportunities but also many uncertainties. It’s at this stage that you need some good advice and maybe some help with the new regimes of accounting, VAT, and payroll - to name a few. We’re here to help with as little or as much as you require.
We have put together a checklist below including everything you need to consider from an accounting perspective when setting up a new business to help you on your way:
