Tax returns can be scary at the best of times. Even more so if the words ‘digital’ or ‘electronic’ are involved in the undertaking. But while you may not be completely up-to-speed with Making Tax Digital, or the latest accounting technology – and who can blame you? – your accountant most certainly should be.
Here at Danbro, we’re specialists in cloud-based accounting, with over 98% of our clients now Making Tax Digital. We provide all our clients with access to free, online accounting packages, such as FreeAgent and QuickBooks Online.
Quickbooks Online work closely with almost 3.5 million companies worldwide. Meanwhile, FreeAgent were recently voted the UK’s number one for small business accounting software. Both platforms include an easy-to-use app, so you can track your income and expenses straight from your smartphone, helping businesses like yours record transactions on the go. And, because so many of our clients are already benefitting from this online accountancy technology, the transition to Making Tax Digital is not as spooky as you might fear.
So, contact Danbro today and find out how to say goodbye to those spook-takular paper trails and fang-tastic tax returns.
What is ‘Making Tax Digital’?Making Tax Digital is a key component of the Government’s long-term plan to help people and businesses keep on top of their tax affairs. HMRC’s aim is to reduce mistakes, combat non-compliance, and help people streamline their tax affairs by introducing digital record-keeping.
First announced in the Spring Budget back in 2015, the ambition for HMRC is to become a global leader in ‘digitally advanced tax administration’. According to the lawmakers, Making Tax Digital is ‘making fundamental changes to the way the tax system works, transforming tax administration’ to become ‘more effective, more efficient, and easier for people to get their tax right’.
As of April next year, all businesses with a taxable turnover north of the £85,000 VAT threshold will need to keep digital VAT records. Figures will need to be reported to HMRC once every quarter. Smaller and medium-sized businesses which fall below this threshold will not be obliged to do this until 2020. HMRC insist that they’ve consulted with stakeholders throughout the development process. Furthermore, following concerns about the ‘pace of change’, it was announced last summer that Making Tax Digital will not be mandated for taxes other than VAT (such as Income and Corporation Tax) until at least April 2020.
However, if you’re a self-employed business, you can voluntarily use the software now. You can use it to store digital business records and send Income Tax updates to HMRC, rather than filing longwinded Self-Assessment tax returns.
DID YOU KNOW … if you’re exempt from submitting electronic VAT returns, for reasons such as age, disability, or remoteness of location, you’ll also be exempt from Making Tax Digital for VAT.
By Making Tax Digital, records such as your business name and address, VAT registration number, and details of VAT accounting schemes, will need to be kept digitally. You’ll also be required to store details of any supplies you make or receive.
Digital tools such as online accounting software will be used for recording things like business income and expenditure. So, with the big switch less than two years away, it might be worth a quick call to check your accountant’s using software which is compatible with the new system.
Making Tax Digital – you’re never alone …HMRC provides digital guidance and support services to make the switch as straightforward as possible. This includes webinars and videos to help businesses and agencies send online VAT returns and Income Tax updates to HMRC. It’s also worth checking out their ‘Stakeholder Communications Pack’, the contents of which can be used to inform key messages and communications activity for member, customers and clients.
So, if you’re scared stiff by software or terrified by tech, fear not! As Making Tax Digital is far less daunting when you’re with Danbro. As our Director of Operations, Neil Ormesher, puts it: “We see the positives from this initiative. Using digital tools can bring much more efficiency to a business. More importantly, it gives business leaders timely information to help make those difficult decisions. We see this as a real opportunity to get your systems ready for the digital future.”