WHAT IS MAKING TAX DIGITAL?
Making Tax Digital is the biggest tax shake-up by HMRC in a generation. And in a field of ever-changing legislation – that’s saying something.
It started on 1st April 2019. And it requires nearly every business to keep digital records, digitally link the various strands of the tax accounting function, and submit their tax returns to HMRC electronically, using compatible software.
Currently, it only applies to VAT, so if you have a taxable turnover above the £85k threshold, you need to get up to speed. And if that doesn’t apply to you, this is your chance to get ahead of the Making Tax Digital curve, because from April 2020, it’s intended to roll out to include other areas of tax too.
LET’S TALK TECH: ARE YOU READY FOR MAKING TAX DIGITAL?
• Digital Records: HMRC have specified which elements of your VAT accounting records need to be kept digitally, and which records can continue to be kept in paper format. We’ll support and talk you through your specific record keeping requirements in an easy to understand manner.
• API: Your digital records need to ‘talk’ to HMRC’s systems through some nifty tech called an API. When it comes to API, you’ve got a few options which we’ve covered in our Making Tax Digital Ultimate Guide, and our tax and IT geeks will explain them and help you to find the perfect fit for your business.
• Digital Links: The final, and arguably trickiest step in the Making Tax Digital chain is to ensure all your own software and accounting processes are digitally linked. What does that mean? It means they need to ‘talk’ to each other with minimal human intervention. HMRC call this the ‘digital journey’ from source data to VAT return.
Luckily, you’ll receive a ‘soft landing’ period of 12 months to complete your digital journey from the date you drop into the Making Tax Digital regime. We’ll help you to use that time wisely, drilling down into your finance function and patching up any non-compliant elements of the journey in good time.
LOOKING TO THE FUTURE
Our IT Solutions team are number one in the UK for Microsoft Dynamics 365 Business Central implementations. They work closely with our tax team at the forefront of powerful technology that will streamline your tax function, mitigate tax risk and free up your time to focus on your wider growth aspirations.
Making Tax Digital is revolutionising the way in which HMRC expect tax payers to deal with their affairs. But for us, this is just the beginning. Watch this space for some exciting developments around Indirect Tax and VAT reporting.