Accountants and businesses needing to comply with the Government’s new plans to overhaul the submission of tax returns, can benefit greatly from making tax digital software, specifically developed to simplify and streamline compliance with this initiative. Soon, paper tax records will not be valid for any tax submissions.
Many businesses are wary of the complications and loss of functionality that can arise in moving to new solutions, which is why some may be yet to make the leap. However, Making Tax Digital software contains every feature needed to manage tax from multiple sources, and will integrate with existing software.
What do you need to know about making tax digital?
It signifies the end of annual tax returns.
The scheme aims to make submitting information to HMRC more efficient and less of an end of year scramble. Instead of an annual return, you’ll be sending information to HMRC at least four times per year. Don’t panic – this won’t equal four tax returns per year. The information required will be a financial update not a full quarter overview.
Many businesses have already joined
After a pilot, all VAT registered businesses started using the scheme to submit their VAT returns and store financial data from April 2019. Income Tax and Corporation Tax will start to operate under the scheme from 2021 onwards. If you haven’t already been using the scheme, you can check your HMRC account to see if you have access to your digital tax account.
Spreadsheets are on their way out
The easiest way to comply with the new scheme will be to keep everything in one place, using a solution such as BTC Software. HMRC have stated that the software you use will need to be able to connect to your HMRC digital tax account.
Real-time tax updates
Submitting regular updates to HMRC will enable them to keep you updated on your tax position in almost real-time. This should have a positive effect on the number of errors and accumulated repayments owed. Hopefully, this will also put an end to any nasty surprises at the end of each financial year.
Non-compliance could be costly
Since the April 2019 start date, the time scale for VAT registered businesses to put in place the digital links needed has been extended to April 2021 due to the coronavirus pandemic. It’s possible, however, that you could be fined for failing to comply with managing tax digitally, so it’s imperative that you either review any existing software for suitability now, or start looking for another solution that will ease the pressure of compliance and streamline your tax affairs.
