Making Tax Digital is a major programme from HMRC. It has already started with many businesses now needing to file their VAT returns via an online system. As an accountant you should already have adopted this approach for many of your clients.
This time next year you will need to have electronic links in place to help HMRC track tax back to your clients' sales or purchases where they originated. There are more changes to come as part of the programme.
What's the purpose of MTD?
The government has introduced this approach to try and address the many mistakes that are made each year with tax – and, importantly, stamp out fraudulent activity. It has stated that 'avoidable mistakes' cost the Exchequer over £9 billion a year.
The improved accuracy that digital records provide will reduce the amount of tax lost to these avoidable errors. Ultimately that will boost the country's coffers, which is potentially an important boost for our hospitals and people in need.
What are the main stages?
The first step is 'Making Tax Digital for VAT' which is now live for most businesses – and therefore for their accountants. By October 2020 all organisations are expected to have introduced the digital linking.
This can be complex, so if you're not already taking steps to comply with this future requirement, do! The good news is that many commercial software providers like Xero, Sage or QuickBooks are picking this up and will ensure it's delivered as part of what they offer. They are also offering webinars and guides to help businesses establish the right back office processes.
Income Tax will be one of the next areas of focus. But when MTD was announced, many companies voiced concern about the pace of change – especially for small businesses. So, in July 2017 the government confirmed that further milestones or new taxes under Making Tax Digital would be delayed until at least April 2020.
How to prepare
But that is still less than a year away. It is very important for British accountancy firms and businesses to keep a close eye on what's needed. The government website features numerous guides and videos to help you understand what's coming and what needs to be done.
For accountants, the more you know the better you are positioned to help your clients. Now is the time to add guides and information to your own website, to inform and engage your customers.
Its also a good idea to plan in some regular client e-shots linked to this information. The sooner everyone is aware of the expectations, new rules and deadlines, the easier it will be to comply with them.
That content is something that accSYS can help you with. We support thousands of accountancy firms across the UK with regular content and information for their clients. If your website needs a refresh and you'd like to harness the power of regular client updates, visit www.accsys.org/accwebsite to find out how we can help.