It’s HMRC’s ambition to create “one of the most digitally advanced tax administrations in the world”. To make this happen, it’s started an initiative called Making Tax Digital (MTD). MTD is going to affect everyone. It’ll transform our tax system making it more effective, more efficient and easier for taxpayers to get their tax correct first time.
So what are the benefits?
Making Tax Digital will reduce our UK tax gap
The MTD initiative initially came about to address the £9bn of the tax gap that is lost annually. This is due to careless errors within people’s tax returns.
HMRC believe MTD will encourage businesses to stay up to date with their bookkeeping. This will mean more businesses inputting their taxes correctly, therefore reducing our tax gap.
It could help your business go to the Cloud
MTD means you’ll need to register for a new digital account with HMRC where you’ll upload information. You’ll also need software which can “talk digitally” with HMRC.
What this could mean is that you no longer keep things in spreadsheets saved on computer desktops. Instead, your software will upload information to the Cloud. This will mean the data you keep is safer. You’ll also be able to access it from anywhere you want to, so flexible working will be easier too (work from Hawaii for a few days, perhaps?)
Swap brawn for brains
It should mean less administrative tasks, as a lot of what you might be doing already can be done by software. You might be able to take a more advisory role in your business, spend more time with your team, you name it.
Outside of tax, it’ll support the UK’s digital plans
Businesses in rural areas had expressed concerns about MTD, as some don’t have easy access to the internet. The good news is, the government has committed £1bn to fund full fibre broadband up and down the country.
So, MTD is even helping more of us get online.