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Is your business Making Tax Digital (MTD) compliant? Do you know what steps you need to take to be compliant and take advantage of this new government legislation? Fill in the form below and one of our advisers will be in contact shortly!
You will have no doubt heard about HMRC’s plan to make tax digital.
To be brief, Making Tax Digital (MTD) is the government’s plan to transform the tax system and move it online. It will affect most businesses.
The primary aim is to make tax administration more effective, efficient and easier for taxpayers. And of course, as we have suspected for some time, HMRC are making this move to get a closer look at your business data and reporting trends, putting you at higher risk.
However, with improved and regular management accounts this change will aid the growth of your business and cash flow planning.
From April 2019, all VAT registered business, trading above the VAT limit of £85,000, were required to submit quarterly VAT information digitally.
This meant many businesses had to make the switch over to a cloud accounting package to record their VAT information, which is a switch all businesses should be making, even if phase 1 did not impact them.
See why you should be embracing cloud accounting here.
From April 2023, HMRC will widen the scope of MTD by including all businesses (limited companies, LLPs, partnerships, sole traders and landlords receiving more than £10,000 income annually). This will likely include submitting a profit and loss report and balance sheet to HMRC quarterly, with the option to pay your tax as you go.
Get ahead of the game and ensure you are compliant for MTD before the deadline creeps up on you. Our team can put together a plan of action and talk you through everything you need to do to get compliant, including demoing cloud accounting software, helping you understand your management accounts better and finding the right tools to automate your processes (leaving you more time to do what you do best).
Yes. If you make no changes to how you are currently operating or planning then this change will just be more deadlines for your business. And leave you at higher risk of an enquiry.
You will have 5 income tax returns per year. The first tax year likely to be affected is 2021/22 (although no start date has been announced). This runs from 6 April 2021 to 5 April 2022.
Assuming you choose an accounting period that is co-terminus with the tax year, your:
No – you’ll still only be paying tax once, at the end of year. But by using cloud accounting software, like Xero, you’ll be able to calculate your tax bill throughout the year and save accordingly. This means you’ll be more organised when it comes to the end of year tax returns.
It’s likely you will actually pay less tax! Being more organised and on top of your cash flow will allow you to remember expenses you’ve paid for personally and undertake your tax planning during various points in the year.
Our forward-thinking clients are taking advantage of the call for quarterly submissions by receiving management accounts from us on a quarterly basis.
Having regular understanding and analysis of your financial data in real time will allow you make key decisions and unlock the potential for growth in your business:
Take advantage of Making Tax Digital by:
Get in control of your business before HMRC start poking around