Making Tax Digital
Article posted: 6th September 2017
The government’s programme of bringing business tax into the digital age was due to begin in earnest with the ‘Making Tax Digital’ scheme. However, the intended April 2018 implementation relating to un-incorporated and 'non-exempt' businesses has been delayed following feedback from legislative bodies, businesses and the accounting profession, all of whom expressed concerns about the broad scope and short timescales to be imposed by the scheme.
The expectation remains that all businesses will have to embrace ‘Making Tax Digital’ by 2020. The new timetable means that:
- From 2019, businesses with a turnover above the VAT threshold will have to keep digital records but only for VAT purposes.
- Businesses will not be asked to keep digital records or update HMRC quarterly for other taxes until at least 2020.
- Larger businesses will not have to use Making Tax Digital for corporation tax reporting before at least 2020, although it is still not wholly clear whether they will ever have to enter the system due to the complexity of their tax compliance requirements.
An end to manual books and records
In line with the new timetable, all reporting must be ‘digital’; this means an end to manual books, records and potentially spreadsheets. There will be one account for each tax payer (individual or business) where all information can be found and examined by HMRC.
With cloud accounting improving dramatically along with the ongoing discussions surrounding Making Tax Digital, there has never been a more appropriate time to update your accounting systems and processes. Given the previous earlier deadline we have been advising our unincorporated businesses and landlords to act quickly and embrace cloud accounting but this equally applies to all businesses.
This is not as daunting as it sounds. With the new age of accounting and the impact of artificial intelligence, there are more and more ways to reduce the amount of time spent on administrative tasks such as data entry. Cloud accounting allows individuals to capture receipts and payments from their bank account directly, have the ability to create quotes and sales invoices easily, dispense with all the paper currently kept on file and see results 24/7 via an App. There are products available that scan and read purchase/sales invoices, track journeys for more accurate mileage claims, provide an all-encompassing expense package that allows employees to maintain their expense claims, attach their receipts before sending them for approval and ultimately be posted into the accounting system.
As cloud accounting specialists, we have been helping to make the transition to digital accounting as easy and smooth as possible for clients - many of whom have fully embraced Xero’s technology alongside our McBrides App. The new timetable allows us all to plan and bed down new technologies to work smarter, enabling us all to become more productive.
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