Earlier in the year, the Government introduced new digital tax rules impacting small businesses.
Time has flown by. We are now quickly approaching 7th October. This is the final deadline that businesses over the VAT threshold have got to be ready by. Don’t panic, the Government is being lenient. But it’s still worth getting ready when you can.
Who knows the most about tax? It is of course the nation’s accountants and bookkeepers. So we spoke to a few to help answer any questions you might have.
First up, we hear from Sharon Pocock of Kinder Pocock on why it’s happening, how it will benefit you and when you need to do what.
What is Making Tax Digital? Does it apply to me?
Making Tax Digital is the biggest shake up of tax administration in recent history.
It’s been introduced by HMRC to simplify tax and give businesses better control of their finances.
Right now, the new rules are compulsory for businesses with a taxable turnover above the VAT threshold of £85,000. These businesses have to use compatible software such as Xero, to keep their records digitally and submit VAT returns to HMRC quarterly.
Why is this happening?
The Government is on a drive to create a ‘truly digital Britain’. This is part of its Digital Transformation agenda. It might seem like yet another thing businesses have to comply with, but that’s not the intention.
Once businesses are set up, they will be in a far greater position to understand where they sit financially.
How is it going to help me?
Gone are the days of hunting for paper receipts to file an end-of-year tax return. This leads to inaccurate books and tax returns. With Making Tax Digital, there will be less paperwork and fewer mistakes.
More importantly it will give you a real-time view of your cash flow. You will get real visibility and control over your data which can only be a good thing.
Making Tax Digital launched in April. But you’ve now only got until October 7th to get ready. So by then, if you haven’t already, you need to submit your tax using compliant software through HMRC. The Government is being lenient, and you won’t face fines if you don’t get ready in time. But it’s still worth thinking about it so you don’t get stung.
For more information, check out our Making Tax Digital resource centre here.