Peter Jones has been talking about it. So have your Accounts department. HMRC have likely asked you the somewhat ominous question: “are you ready?”
So, what really is all this noise about ‘Making Tax Digital’?
HMRC is introducing the “Making Tax Digital” programme which is going to put an end to annual tax returns. Instead, they want businesses to submit tax information online quarterly. From a numerical perspective, you may worry that four times a year means four times the work, but don’t panic! Every business will be provided with a digital tax account which will be connected to their bank data. This is going to allow HMRC to automatically gather real-time financial information which is going to save you time.
What is Making Tax Digital and Does it Affect Me?
Following studies highlighting the £9-billion impact that incorrect tax submissions has on the Exchequers’ pocket, the UK Government went ahead in February 2018 with laying out an official secondary legislation for VAT. The campaign, Making Tax Digital (MTD), promises to efficiently transform the way people and businesses make electronic tax submissions, making it easier for tax-payers to ‘get their tax right’.
Time is ticking….
Well, if you have a ‘VAT-registered business with a taxable turnover above the £85,000 VAT threshold’ (https://www.gov.uk/vat-registration-thresholds), you will now be legally required to electronically submit and store your tax returns via the Making Tax Digital platform. The Government’s timeline includes MTD for VAT to commence on 1st April 2019, with other aspects, including income and corporation tax, to be postponed until April 2020.
The introduction of MTD heralds a time of change. This feature will give businesses and organisations, which are still old fashioned and reliant on paper, the push they need to enter the sector of digital working methods.
Figure 1: Timeline of Making Tax Digital
In order to make your electronic submissions, you will need to be using accounting software that is compatible with the MTD platform requirements.
“My Accountancy Solution is a Sage Product; How Does Sage Plan to Support Me?”
Changes to legislation can be worrisome, and you may naturally be concerned about the impact this has on your business processes. As a Platinum Sage Business Partner, the fundamental question Acuity customers ask is “will my accountancy system support my business through this change?”
For Sage Business Cloud customers, both agents and businesses can rest easy knowing that their software gives them the ability to:
Keep Digital Records
Submit VAT Return
View VAT Returns
View VAT Liabilities
View VAT Payment
Sage are in the process of updating their product portfolio to ensure that all accountancy solutions are compatible with the HMRC’s MTD platform. By summer 2019, they aim to have all products up and running on the latest versions. For some, this means that becoming compliant may be as simple as installing the latest Sage system update.
What Are the Key Benefits to Using Sage for Your Electronic Tax Submissions?
“We believe MTD will force tax administration to become more eﬃcient, and will give our customers increased visibility into their accounts throughout the year, which will help us identify how they can become more proﬁtable” (Toby Woodhead, Solution Architect, Armstrong Watson)
Sage are HMRC Trusted: Sage has been working with the HMRC on MTD since the campaign’s inception to ensure our accounting products are leading the way in compliance.
Due to this, we are confident that our products are 100% compliant – the same confidence we want to instil in our customers whilst submitting their VAT return. Relax with the knowledge that there is no double entry of information that the HMRC already have, meaning you can get on with your other business processes worry-free.
World-class support: Sage and Acuity Solutions will be there for you every step of the way, with expert-led webinars, live events, and telephone support.
By 2020, Sage aim for customers to be able to see a compressive finicalities picture of their liabilities and entitlements.
What Can Businesses Do in Order to Prepare for the Making Tax Digital Process?
Businesses will ultimately need to know how to organise their client database if they are to figure out which clients will need support to comply. Additionally, they will need to ensure that they use the right MTD compatible software to file tax returns and keep digital records. An ‘Auto-Entry Partner Program’ has also since been put in place to help businesses prepare for MTD. This has been done by getting firms to increase the speed of benefits of digital working.
What is the Process of Making Tax Digital within Sage Business Cloud Financials?
What Can You Do Now Until Then?
Speak to your accountant and see what the plans they have in place for MTD to make the transition as smooth as possible. More importantly, ask them: “are we ready? ”
If you would like to know more about Making Tax Digital, please fill out the form below and a member of our team will be in contact:
Choosing Acuity Solutions means choosing one of the top 5 global Sage business partners, with over 20 years' experience in the Sage product marketplace, we have previously held the Sage "Business Partner of the Year" awards for Sage X3 and Sage 300.