some info here about 2019
From April 2019, HMRC is introducing Making Tax Digital (MTD) as a part of its ongoing digitisation program. This means it will become compulsory for all businesses with a turnover of over the current VAT threshold of £85,000 to maintain their VAT records digitally and submit VAT returns through MTD compatible software.
There is no impact on the frequency of returns nor the payment dates; this will remain unchanged. By April 2019 the software used must be MTD compatible and by April 2020 the software must be capable of exchanging data digitally with HMRC. Filing via the existing HMRC portal will no longer be permissible.
The introduction of MTD is a great opportunity for businesses to review their systems, software and processes. It should facilitate and ease out the processing of invoices and payments. This will potentially gear up the collection of debts and provide key information to help in the management of the business.
Meanwhile, HMRC recently confirmed that Brexit will not affect the introduction of MTD for VAT. Experts previously suggested that HMRC would have to delay the introduction of MTD for VAT if the UK was to leave the EU without a Brexit deal.
Due to Brexit, MTD implications for Income Tax and Corporation Tax have been delayed beyond April 2020.
Many businesses are already using software and digital processes for payment of bills, customer interaction and banking transactions. The digitalization would greatly help with production of up to date management information within few days of month end and review of key performance indicators. This could be a turning point for any business. The use of up to date information can assist you plan your future steps as a business, safe in the knowledge that the decisions you make are based on current and precise data. Linking the data to financial forecasting software can provide you with the data to immediately see what the impact of the decisions you make could have. With budgets set, you now have the tools to monitor your progress and benchmark your business.
A business which knows their debtors and creditors in real time can potentially improve cash flow and enable to be much more progressive towards debt collection and making payments. A digitalized and automated systems can be set up to send out email reminders, debt management and even set up the email with a link to your card payment provider so that the customer can pay you at the click of a link, with the money automatically being allocated against the invoice. Does it sound too good to be true? In fact, all of this is already feasible!
Your next steps should be to ensure that your systems and your accountant are working towards MTD by next April.
Firstly, look at the publication on Making Tax Digital which gives more details of the proposals then ask whether your software will be compliant and how it can be used to ease the process whilst improving the information you need to run your business.
If you need further help in ensuring your business is ready for MTD get in touch with us using our contact link.