Making Tax Digital
Making Tax Digital (MTD) is due to begin April 2019 – What impact does the digital future have on you and how can Berics help?
Those who will experience the mandatory changes in April 2019 will be Self-Employed and Small Businesses that exceed the VAT threshold. From 2018 MTD software will go through a testing period to ensure it is prepared for the launch. The software will be provided through a third party, Berics will be keeping track of this and continue to inform you of any changes that may affect you. The software will be in full working order by 2020, MTD will become available to all Self-Employed and Small Businesses below the VAT threshold as optional. Berics will be on hand to support you when MTD is introduced.
Why is MTD being introduced?
Aside from moving on with the times of a digital age, it has been reported that between 2014 and 2015 taxpayer mistakes accounted for a £3.5 billion loss in VAT returns alone. MTD’s objective is to decrease errors by making it easier for businesses to get their tax right.
MTD Rollout changes
Originally MTD was due to begin in 2018, the HM Treasury has postponed this launch. The delay is due to how rapid the changes were going to be, to avoid any malfunctions and ensure businesses have enough time to acclimatise to the change. At Berics, we are fully prepared for the rollout. For more information on the MTD postponement, please visit https://www.gov.uk/government/news/next-steps-on-the-finance-bill-and-making-tax-digital
What’s the impact on Self-Employed and Small Business Owners?
By 2020 tax returns will be submitted quarterly, marking the end of annual tax returns. Theoretically this should save you time by not having to scrutinise a years worth of calculations. As you will no longer have to go through the repetition of re-entering your company’s details and re-sending documents, MTD will have all your details stored on their systems and tax returns will be as easy as checking your bank account balance online.
Waiting times on the phone to HMRC will become a thing of the past. The software you will use for MTD is linked to HMRC systems, it’s an easy click of a button which is controlled by you, and you decide what time of day you return your taxes.
You can continue to use your own spreadsheets; however, they must be compatible with MTD software.
MTD’s premise is to offer flexibility and give Self-Employed and Business Owners more time to concentrate on their businesses instead of being bogged down with the task of tax returns.
What should Self-Employed and Small Business Owners do to prepare?
The answer is – nothing. For the time being, continue to submit your tax returns using the same process as you do now. Berics will support the transitioning period and remove any worries you may have regarding MTD by ensuring the changes are as smooth as possible.