MTD is a tax office initiative designed to make sure the UK tax system is effective and efficient.
The idea is that financial data is sent into the tax office directly from your bookkeeping software, or though bridging software if you use a spreadsheet or software that is not connected to the tax office. This is a big change because at the moment 71% of businesses log in and type their VAT figures the tax office Website.
The first group of businesses required to comply are VAT registered businesses those with an annual turnover is over £85,000. They must keep digital records for VAT starting April 2019. However, there is an exception for what the tax office call complex businesses that will start six months later on 1st October 2019. An example is car dealers who account for VAT on the margin of a car, rather than the buying and selling price.
The four-step MTD plan we recommend is:
- Know your dates
- Check your software
- Review your processes
- Ensure you meet the deadlines
There is no doubt that MTD is good for software companies because the tax office is forcing businesses to change. But, it should be good for businesses in the long run.
The new technology is embracing artificial intelligence which can save time and improve the accuracy of data. These Apps can also diagnose predict the future and see potential problems before they arise and recommend possible solutions in real time.
Our preferred software is Xero and this is MTD ready and we can quickly set you up and get trained. We can also help you develop a Financial Policy so you hit the deadlines and avoid penalties which mean you’ll reduce the likelihood of being investigated.
If you’d like to double check you MTD plans get in touch.
Image from Flickr by GotCredit.