The Making Tax Digital reforms spearheaded by HMRC begin to come into force next year. They’re designed to help the government lose less cash through erroneous tax return filings. For that reason they rely on software and technology in order to plug the gaps that manual filing can cause. This article will explain how you need to prepare…
Speak to your accountant
The key date to note for Making Tax Digital is April 2019. If your accountant prepares your accounts for you, you’ll need to check with them that they either (ideally) already have HMRC-compliant software in place well before then, or that they plan to shift to a compliant system right away. If you file your own, it may be worth speaking to an accountant anyway if you have any questions as that can put your mind at rest.
Find out your status
Not all firms are going to be affected by the Making Tax Digital reforms at the same time. In fact, some firms are going to be affected earlier, while others will have a longer implementation period at their disposal. However, it is still worth preparing for Making Tax Digital sooner rather than later no matter what your implementation date is: new solutions can take time to get set up, especially given that you’ll need to link them to your pre-existing systems.
Audit your software
Once you know when you’re going to be affected by Making Tax Digital, your next step needs to be to think about your current software setup and whether or not it’s compliant. The worst-case scenario here is that you currently complete your tax returns by hand: if that applies to you, you’ll have to make a substantial shift to digital pretty soon. For those who use Microsoft Excel or another spreadsheet provider, you’ll have to talk to your provider or accountant about integrating this with the HMRC API.
Train your staff
If you have staff on your finance team, they’re going to need to know about Making Tax Digital. While ultimately, responsibility for compliance will still lie with whoever signs off the tax returns within the organisation, staff members should be aware so that they can keep an eye on problems with any new software and flag them as soon as possible.
Prepare for the future
While April 2019 is the key date for those who pay VAT, other taxpayers are also going to have to think about Making Tax Digital. At an unspecified date in the future, payers of income and corporation tax will also be brought into the fold – so thinking ahead is going to be essential.
Making Tax Digital can seem on the face of it like a tough job and an unnecessary intrusion on an already overly long to-do list. However, while there is a long checklist of jobs for people in this space to think about, it’s definitely the case that savvy finance team leaders can take the initiative and prepare well in advance of the April 2019 implementation date.
Worried about Making Tax Digital? The Access MTD resource hub is a great place to find out how it might affect you and what you can do about it.