You may have heard the term
Making Tax Digital , on HMRC notices or maybe not ? but if you run a business which is VAT registered you soon will.
The government is introducing a new system of reporting taxes due on a real time basis. The aim being that business and individuals will be aware of their tax obligations as they become due making financial planning easier. There will also be savings to HMRC through streamlining processes and reducing unpaid taxes.
Individual tax payers will be able to access their personal tax account through the Government Gateway login. You may have already signed up for this service if you have needed to provide information on certain issues such as tax credits, pensions or P60s. The idea being that all online information will be able to be accessed in one place.
Plans for Making Tax Digital have been sketchy however it is now announced that by the year 2020 self employed tax payers who need to report profits or losses will be required to submit quarterly tax reports and a final return.Some self assessment individuals will be removed from the obligation of completing returns.
For VAT registered businesses Making Tax Digital comes into effect From April 2019, as the business owner you will be required to,
Keep your business records digitally
Provide your VAT return information to HMRC through Making Tax Digital software
Should you be using online software such as Sage online ,Xero or Quickbooks you will find online support to use the updated software.
For those presently using manual or spreadsheet systems to calculate VAT a plan will need to be developed to become Making Tax Digital compliant. Bridging software may be available for spreadsheets however this is not yet fully developed. In any case Making Tax Digital May initially involve more time and cost in training.
I am currently assisting several clients to prepare for the new legislation when it comes into force next year and would be happy to answer any queries you may have.