Businesses are being urged to act sooner rather than later when it comes to filing their tax affairs online.
Sarah Hartshorn, from our office in Shrewsbury, said under new Making Tax Digital (MTD) rules, most VAT-registered businesses will be required to keep digital records and send their returns online from April this year.
“The new rules will go live from April 1st for VAT-registered businesses with a taxable turnover of over £85,000, and it’s vital that companies are properly prepared for the changeover. As well as keeping their tax records digitally, businesses will be required to send their returns to HM Revenues and Customs using approved MTD compatible software.
“HMRC’s ambition is to become one of the most digitally-advanced tax administrations in the world, and MTD is making fundamental changes to the way the tax system works. These changes will transform the system to make it more effective, more efficient and make it easier for taxpayers to calculate the tax they owe correctly.”
Sarah said any businesses who were unsure of their tax responsibilities and how they would be affected by the changes to the rules should seek professional advice.
“A pilot scheme for sole traders and uncomplicated limited companies has been running for several months, and is now open to partnerships and flat rate VAT companies too.
“HMRC and software providers are encouraging businesses to take part to ensure they are ready for when MTD actually goes live. But before businesses join the pilot, they must be using MTD compatible software as they won’t be able to return to the existing submission process.
“For a small minority of VAT-registered businesses with more complex requirements, the rule change has been deferred by six months to allow enough time to test the service with them in a separate pilot scheme before they are legally required to comply.”
Sarah said the majority of customers wanted to get their tax right but the latest tax gap figures showed too many were struggling, with avoidable mistakes costing the Exchequer over £9 billion a year.
“Thanks to the improved accuracy through using digital records, along with the help built into many software products, and the fact that information is sent directly to HMRC eliminating the risk of transposition errors, the amount of tax lost should be reduced.
“Changing your tax system takes time and planning, so it’s vital that businesses are preparing for the new rules now – speak to your accountant or software provider to make sure you’re using the right software for the very individual needs of your business.”
Contact us today to talk about getting you and your business ready for Making Tax Digital.