Change, change, change! There are those of us who hate it and those of us who love it – and I’m not talking about the coins jangling about in your pocket. Neither do I mean change for change’s sake – where a perfectly good system is replaced by an unknown, untested and often unnecessary alternative.
The change that I love is where an antiquated, slow and error-prone system is replaced by something that is fast, reliable, easy-to-use and designed for the modern day. And when this change is brought about by an organisation that I’m not always a big fan of (see some of my previous HMRC posts) I am even more delighted by the prospect.
Making Tax Digital is a positive step
HMRC’s commitment to the Making Tax Digital scheme will put the UK ahead of most of the world in using technology to simplify taxation and make everything more visible to businesses and individuals. They have even pushed the date back to give businesses more time to convert and made allowances for smaller businesses to catch up a little later.
The main date to be aware of for now is April 2019, when all VAT submissions will have to be reported through an electronic system, for businesses with a turnover above the VAT threshold.
The good news and positive effects of the scheme far outweigh the fear that some companies might have about going digital. The main factor being that many companies have already switched and the evidence strongly suggests that it is working well. In 100% of the companies I have personally worked with there have been nothing but benefits from going digital (online).
The benefits of Making Tax Digital
Here are some of the main benefits in brief:
- The end of the annual tax return: If that isn’t worth a cheer I don’t know what is!
- Better use of information: transparency and personal control/access to all the information HMRC holds on you – plus you’ll never have to resend the same information again – again
- Tax in real time: individuals and businesses will be able to see exactly how much tax they owe at any time – and you need never be surprised by another ‘unexpected’ tax bill
- A single financial account: the plan is that by 2020 all of your dealings with HMRC will be available in your digital account and viewable in one document – if that is what you require
- Interacting digitally with customers: you, your accountant or anyone else with representation authority will be able to interact instantly through secure web-chat and messaging channels – speeding up the resolution of any queries and giving fast access to all the information you need
As a fully accredited Xero migration expert, I have first-hand knowledge and experience of just how easy it is to integrate with electronic accounting. More than that though, the benefits of digital accounting give me far more time, access to information and flexibility to provide my clients with significantly higher levels of personal attention.
This means that as well as being time and effort efficient, my customers generally become far more tax efficient.
If you would like to know more about how Making Tax Digital will impact your business, for the better, or need some further clarification about what it means in real terms – Please get in touch.