From the 1st April 2018, all UK businesses will be required to maintain and submit all financial records in digital format to the HMRC, using a recognised and approved accounting software.
The Government hopes that its new “Making Tax Digital Initiative” will not only make it easier and quicker for individuals and businesses to submit accurate financial data, but that it will also streamline the process so that it is effective and efficient.
How will Making Tax Digital affect you?
If you are a business trading in the UK or overseas, and have an annual turnover that is over the VAT threshold, you will be required by law to submit all of your finances in digital format to the HMRC. No businesses are exempt from the new regulations.
The current VAT registration threshold for VAT in the UK is £85,000 and the new MTD For VAT rules have been devised to make it easier for tax payers to get their tax right. All relevant VAT return data should also be linked so that it is easier for transactions to be traced from their original source.
This is because the Government believes that a streamlined tax record system will provide real time filing for all individual transactions submitted to the HMRC and improve and optimise VAT completion.
Are you ready?
If you are a business in the UK that turns over more than £85,000, now is the perfect time to invest in appropriate Making Tax Digital Software in time for the new initiative which is set to come into force on the 1st April.
At the same time, the Government has advised that all businesses should
take the time to ensure that all accounting records are up to date and MTD compliant.
VAT policies and practices should also be up to date and all individuals handling financial processes within your business should be aware of the Making Tax Digital Initiative.