Get prepared with Making tax digital !
What is Making Tax Digital ?
Starting in April 2019, businesses who have a turnover above the VAT threshold (£85K+) will need to maintain digital business records and submit their VAT return through the new Making tax digital (MTD) system account and file returns online every quarter. HMRC wants to be known as the reference for digital advanced tax administrations in the world. By doing so, they will make it easier and more efficient for people to comply.
If you are VAT registered, it means that you will need to have a digital tax account. Your bank data and information from other government sectors will remain in your account and will only need to be updated if necessary. Moreover, you will need to submit tax information every 3 months instead of each year.
Is it a better way to do my tax ?
Changes are always a bit scary, but once you will see how simple and helpful it is, you will realise the measure taken by the government is better:
Simple and efficient
HMRC won’t ask you for information that they already have or that they can get from somewhere else (employer, bank, government department, etc.) Also, by going onto your account, you will see these information and will be able to change them if necessary.
Everything will be done online. No more paper forms to fill and send by the post. You will be able to do it all in your digital tax account. If your tax advisor or accountant use a cloud software, like Xero, they will be able to take care of that for you.
By submitting your tax every 3 months instead of at the end of the year, you will know what you need to pay in real-time. Also, with that measure, it should help to avoid big bills and stay on top of your finances. Moreover, you will be aware of the situation and can make strategic decisions such as reinvesting the money in your business.
How can we help you?
PRWS works closely with the cloud software Xero and we are ready to help you with this new measure. We already have a lot of clients who are digital and they only see benefits. PRWS will be there to support you through the transition as we know the indepth detail of the “make tax digital” measure and we use a software that simplifies the process. Also, Xero wrote a good article to answer a few questions about making tax digital in which they share how their software is collaborating with HMRC and how they built "a whole new VAT return experience and workflow to support the changes that MTD introduces" (Xero, June 2018). Just click here to read it !
Also, making tax digital can be a good opportunity to meet us and see how we can help you with your tax and your business. You might miss some opportunities to save on tax by doing it on your own.