With the launch of Making Tax Digital, an online HMRC initiative for tax, your business needs to be ready. Using a Making Tax Digital software, your business will need to store and submit their data to HMRC, moving away from traditional paperwork systems.
The scheme is something that is new to most businesses, meaning that company owners will need as much information as possible to give them the confidence that they are using the system correctly.
It’s important that your business is ready for MTD. The change is unavoidable, as it will be no longer possible to make a tax submission using any other method but through a making tax digital software. Your business needs to prepare early enough to guarantee that you meet the government’s deadlines. The following is a checklist that will help you understand whether your business is ready for Making Tax Digital or not:
- Is your business affected by MTD for VAT?
If your business meets a VAT threshold of £85,000, then MTD for VAT will be compulsory for your business. If you’re aware that your business is approaching this threshold then it’s advised to seek consultation from a professional accountant in order to prepare effectively and understand the requirements of the initiative.
Forecasting your business income is also an important factor of preparation. If you’re aware that in any given period of time you will meet the threshold of MTD for VAT, then it would be advisable to put robust systems in place. You should invest in a specialised Making Tax Digital software in advance, so that you have experience navigating the user interface.
- Understand your existing processes
In order to avoid penalties, you need to analyse the existing processes you have in place. Is your accounting invoice-based or does it involve an accounting scheme? How are your expenses captured? Your accountant will be able to give you guidance on these aspects of your procedures.
- Is your software compatible?
You need a software that is compatible with the HMRC Making Tax Digital initiative. The attributes of the software that are necessary is the functionality to be able to take your records and communicate with the HMRC system effectively. If you are currently using outdated software, you will need to invest in an update to ensure your systems are compliant.
Get Started With MTD Today
As the deadline approaches, it is essential that your business starts its preparations as early as possible. This allows you plenty of time to uncover any errors as you feed the update, leaving you a spacious timeframe to fix any issues.
As the deadline looms, many other businesses will also be rushing to switch over to the new system, increasing congestion. Take action now to avoid these issues. If you encounter any problems in the process HMRC has a dedicated helpline to support you through the transition.