What is Making Tax Digital and Can It Affect Your Business?
Making Tax Digital (MTD) is the HMRC plan to have a fully digital tax system.
Who does MTD effect?
All businesses above the VAT threshold of £85,000.
What does MTD mean to your business?
The HMRC have estimated a loss of tax revenue of approximately £8 billion a year from errors and mistakes alone that they are looking to now capture. They will be doing so by making it compulsory to submit your company accounts quarterly, your business will already be completing a quarterly VAT return however what this means is you will be effectively submitting your end of year set of accounts every quarter.
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For every business with revenue over the VAT threshold of £85,000 your company’s bookkeeping will need be up to date every quarter and then the accounts would need submitting digitally to the HMRC. This will massively effect the amount accountancy work your business needs completing quarterly.
As a director you will also have to submit your personal tax return quarterly from 2020.
Fines will be payable for businesses who do not comply with Making Tax Digital.
What does MTD mean for accountants?
There is now extra work involved for every client over the VAT threshold. The fee charged to a client in 2019 will be 3 to 4 times more than paid in 2018 unless technology is embraced to reduce man hour needed to complete tasks such as bookkeeping which traditional accountants are struggling to come to terms with.
When will MTD happen?
MTD trials started in the first half of 2017. Full implementation is planned for 2019.
What you need to do.
You will need to appoint an accountant who offers monthly bookkeeping and has the ability to submit your accounts digitally every quarter.
More Than Accountants are Making Tax Digital ready. We offer unlimited accountancy services and monthly bookkeeping for one monthly fee. You can use our online quoting tool here.
Every new customer receives a free Xero accounting software subscription and a free Kindle Fire 7 tablet to manage their accounts on the go.