The business world has suffered massive disruption thanks to the Coronavirus pandemic meaning you need more than ever to be constantly making decisions to ensure your business has the best chance of surviving.

This has certainly taught us the importance of having up-to-date management accounts and some key weekly statistic on our business in order to inform critical business decisions. Never before has monitoring your financials regularly been so vital to your business survival.

In the meantime, the Government announced on 21 July 2020 that Making Tax Digital (MTD) will be extended to all VAT registered businesses from April 2022, with income tax quarterly reporting applying from April 2023. Corporation tax will be consulted later this year.  

MTD is a Government initiative to transform the tax system and move it online. The primary aim is to make tax administration more effective, efficient and easier for taxpayers. But of course, it also allows HMRC to get a closer look at your business data and reporting trends, leaving you at a higher risk of enquiry if you don’t keep complete and up to date records.

However, with improved and regular management accounts, you will also get a closer look at your business and cash flow planning, aiding business growth and better business decisions.

How will MTD impact you?

From April 2019, all VAT registered business, trading above the VAT limit of £85,000, were required to submit quarterly VAT information digitally.

From April 2022, all VAT registered businesses will have to comply with MTD and keep VAT records in digital form. This will mean recording on approved software like Xero to provide electronic submission for VAT to HMRC.

From April 2023, HMRC will widen the scope by including all businesses (limited companies, LLPs, partnerships, sole traders and landlords) with a gross income greater than £10,000.

These businesses will need to submit a profit and loss report and balance sheet electronically on a quarterly basis to HMRC, with the option to pay as you go.

At the end of the year they will be able to add any non-business income/information to complete their tax affairs using MTD compatible software. This should ultimately replace the need for a self-assessment tax return.

The government will consult in the autumn with regard to extending MTD to corporation tax.

With HMRC’s need to recoup money spent support us all through this crisis, we wouldn’t be surprised to see tax payments being brought forward in line with this legislation to be more like the employee tax system where you pay as you earn.

So does this mean you’ll have the stress of completing 5 tax returns? Does this mean you’ll pay more tax?

Yes and no... Find out the changes MTD will bring

Don’t fall behind

If you haven’t made the move to a Cloud Accounting software, it’s not only important you do so to ensure you’re ready and compliant for the MTD deadline, but so you can aid the survival of your business.

Our team of experts can offer free demos of various cloud accounting packages, provide training and support with setting up and using the software package.

We can also build a bespoke dashboard so you can have everything you need in one place, with one click, help you to understand what the figures are telling you and go a step further by finding tools to help you automate your processes, leaving you more time to do what you do best.

Why wait to get in control of your finances? Call 01474 853 856 or email discovery@a4g-llp.co.uk.

Contact me today!

Emma White

FCA

Partner

01474 853856

Send me a message

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