The treasury have recently announced fundamental changes to their Making Tax Digital roll-out. Not only has the timetable changed, but the nature of the information required by HMRC has changed too. There are a number of areas which still require further clarification from HMRC, but here are three things that we do know:
1. Making Tax Digital has changed its focus to Making VAT Digital and it will effect businesses operating above the VAT threshold from April 2019. Given that businesses already submit their VAT returns online, it appears that HMRC will require a submission of the underlying transactions along with the VAT return from April 2019. The exact requirements are not clear, but we do know that these businesses will all need to start keeping their records electronically rather than any sort of manual system.
2. Making Tax Digital is still coming – completion of quarterly personal tax returns will still be required at some point in the future, probably April 2020, unless there are further delays during testing. Therefore, businesses still need to be preparing for a complete digitisation of the financial records to be ready for this. New software systems take time to “bed-in” and businesses should be taking action now to ensure they are ready for these future changes in good time.
3. Cloud based accounting is the right choice – both of the changes above will require a system for business to submit their financial data to HMRC. Businesses may also want their independent accountants to review their financial data prior to submission to HMRC. The best way to achieve both of these things is to use a cloud based accounting package together with a cloud accountant who understands these packages. The future of accounting is in the cloud.
Armstrong Watson are the UK’s largest cloud accountant with a wealth of experience helping businesses of all shapes and sizes, in particular family owned businesses. To find out how we can help prepare your business for a digital future contact us here.