This year has seen a big change in the world of tax payments with the introduction by HMRC of Making Tax Digital. Initially this has been for VAT collection but there is also an ongoing pilot for income tax payments as well.
Making Tax Digital is a major government programme to make tax administration more effective, more efficient and ultimately make it easier for taxpayers to get their tax payments correct. The VAT element became live in April this year stipulating that paper bookkeeping records are no longer suitable to meet the conditions set out in tax legislation. Businesses operating above the VAT threshold must now use computer software to track their financial data and send tax returns electronically to HMRC. The government will ultimately achieve its objectives if it does not distract business owners away from the actual running of their business.
Over the course of this year we have helped a number of our clients migrate successfully and we are here to help you plan effectively. The online accounting software providers have incorporated Making Tax Digital into their packages making it an easier process for VAT calculations. And, with live data that is consistently updated, it’s much simpler to track your finances and constantly be aware of the tax payment you will be required to make.
Making Tax Digital means you have less work to do when it comes to VAT returns and bookkeeping. Because your bookkeeping is now easier and quicker than ever, you can spend the extra time putting the work in to grow your business. There’s also the added bonus of having less paperwork cluttering your office!
Because you enter real-time information into software that is calculating your tax liability automatically, there is a reduced chance of making a mistake that could cost your business money. Before Making Tax Digital, you had to manually fill in a VAT return form, so the process becomes more efficient and also helps you plan your cashflow to meet the payment dates.
Whilst the process is easier, we would still recommend that you discuss your tax affairs to ensure you are being prudent in your actions. One of our key areas of expertise is finance mentoring which helps individuals and businesses create tax efficiencies, minimise liabilities and business owners drive their businesses forward.
We offer both personal and business tax planning reviews as well as mentoring and advisory services, so use us to help Making Tax Digital work effectively for you.