We are about to witness a huge change in the way that businesses are required to keep their accounting records. This change is being introduced as part of by the HMRC ‘Making Tax Digital’ initiative from the government, which is due to go live from 6 April 2019.
Who will be affected by ‘Making Tax Digital’?
The first tranche of businesses to come under HMRC’s ‘Making Tax Digital’ (MTD) system will be VAT registered sole traders and partnerships. These businesses will be expected to keep their records on a digital bookkeeping system, which will allow for direct upload of financial information on a quarterly basis, followed by a final year end upload that will determine your tax position. After this first wave of businesses, the new rules will then be applied to limited companies and possibly non-VAT registered traders.
Making Tax Digital for businesses
The most obvious change involved with Making Tax Digital for businesses is that they will have to review the way they keep their records, the frequency that they complete their bookkeeping and the accuracy of the information recorded. It will no longer be adequate to keep manual records and even Excel spreadsheets won’t be good enough.
Record keeping will have to be completely up to date and will have to be as accurate as you can get it and retrospective tax planning will become a thing of the past! The precise filing requirements are still under discussion at the moment, so it is impossible to detail exactly how everything will work. But we think the most important action you can take now is to get to grips with a suitable digital solution.
What should you do if you’re worried about Making Tax Digital?
Well, we’ve spoken to our next-door-neighbours, Kirkwood Wilson accountants, and they, as well as other accountants with whom we work with, are recommending “cloud based” software, which comes with a range of Apps that suit particular businesses and can be used from your mobile phone.
It can be accessed wherever you have an internet connection and downloads data direct from your internet banking and allows you to be completely up to date. It will fulfil all of the MTD requirements and, very importantly, it is easy to use and – thankfully – inexpensive.
If you’re interested in finding out more about HMRC’s Making Tax Digital scheme and the solutions available, then speak to your own accountant or get in touch with Acumen on 0151 520 4353 or email firstname.lastname@example.org.