Firms urged to prepare for ‘digital tax revolution’
Businesses now have less than nine months to prepare for new rules requiring them to manage their accounts and submit tax returns online.
The government’s long-anticipated Making Tax Digital regime, hailed as the biggest tax shake-up in a generation, finally comes into effect in April 2019.
Experts at accountancy and business advisory firm MHA Moore and Smalley have warned the changes could catch many businesses off-guard.
Judith Dugdale, a director at MHA Moore and Smalley, has urged business owners to begin researching and investing in digital reporting software that’s compliant with the new rules.
She said: “Making Tax Digital for VAT is being brought in by government as an attempt to streamline and simplify the tax reporting system, though it may come as a culture shock for many small businesses who are used to doing it the traditional way.
“These changes will soon consign paper records to the history books, so business owners need to start getting ready now.
“There will be specific rules for how business will report digitally and the software used to do this has to comply with HMRC’s guidance. There’s a lot of software packages out there that won’t comply with the new rules, so it’s essential to get the right advice as soon as possible.”
Initially, the Making Tax Digital rules will only apply to VAT returns. It means that any business registered for VAT with a turnover over the £85,000 VAT threshold will be required to keep digital records for VAT purposes and submit their VAT return to HMRC through compatible software.
MTD for income tax and corporation tax will follow, but not before April 2020.
Judith, who is also head of digital solutions at MHA Moore and Smalley, added: “We’ve been offering a digital accounting service to our clients since 2015 and have been investing heavily in our wider digital capability, so we’re well place to offer clients trusted advice in this area.
“Our digital solutions team can recommend various software programmes depending on individual business needs.”
MHA Moore and Smalley recommends that small businesses still preparing records using manual records look at Quickbooks online software which is compliant with Making Tax Digital rules. The firm offers free demonstrations of the software at five of its offices each month and small businesses are welcome to attend.