Most people try to get their tax right with the best of intentions, but that doesn\u2019t mean that they never make mistakes. In fact, research from HMRC shows that avoidable tax mistakes cost them over \u00a39 billion every year. Perhaps it\u2019s no surprise that they\u2019re so keen on cutting down on it.<\/p>\n\n\n\n
The MTD initiative includes some changes that business owners will need to wrap their heads around if they want to make sure that they\u2019re in full compliance. For example, many businesses with a taxable turnover above a certain rate will be legally required to use the Making Tax Digital service to keep digital records and to submit their tax returns.<\/p>\n\n\n\n Fortunately, many businesses and accountancy firms are already well ahead of HMRC and have been keeping fully digitized records for several years. There are plenty of good reasons for doing this, such as the fact that it allows you to view real-time financial records and smart projections to better manage your ongoing cash flow.<\/p>\n\n\n\n With that said, just because you\u2019re keeping digital records, it doesn\u2019t mean that your system will be compatible with the government\u2019s tax gateway. You may need to work with a professional to identify whether the software that you\u2019re using is fit for purpose, so feel free to reach out to us if you have any questions.<\/p>\n\n\n\n Some companies are already taking part in a live pilot test to help HMRC to develop their digital offering for income tax<\/a>. This means that if you\u2019re self-employed as either a business or a landlord, you can use the beta version of their software instead of being required to fill out a self-assessment tax return.<\/p>\n\n\n\n Not unusually, there\u2019s also no need to panic about immediately being in compliance because the rollout has been delayed to give you a little extra breathing room. Back in July 2017, the government said that the Making Tax Digital initiative wouldn\u2019t be in full force for taxes other than VAT until April 2020. Since then, they\u2019ve also said that they won\u2019t be applying it to any new taxes or businesses in 2020.<\/p>\n\n\n\n The MTD initiative might not affect you at all, at least immediately. If your company has a turnover of less than \u00a385,000 then it won\u2019t be affected until at least April 2020, although that\u2019s no excuse not to make sure that you\u2019re in compliance ahead of time. If you\u2019re earning more than that, you\u2019ve been required to keep digital records for your VAT since April 2019.<\/p>\n\n\n\n The good news is that this is mostly just a change in the way in which you provide your records, and it won\u2019t require you to provide information more frequently than you already are. There are also plenty of resources out there, many from HMRC itself, which it says is trying to support businesses in making the transition.<\/p>\n\n\n\n Some people have even suggested that the delays in the Making Tax Digital rollout are an indicator that the government has no plans to make it mandatory at all. We\u2019d beg to differ, but either way, it\u2019s a good idea to make sure that you\u2019re keeping accurate digital records within the government-approved system. You can do this by proactively volunteering to test it out, although you\u2019re under no obligation to do so.<\/p>\n\n\n\n Either way, it\u2019s a good idea for you to start getting ready by switching to a supported software system<\/a> and by ensuring that you\u2019re recording the vital information that HMRC asks you for. Most of these software applications will automatically prompt you to store all of the data that HMRC requires, but you can also ensure you\u2019re in compliance by double-checking that you\u2019re logging the information they\u2019re asking for. This includes:<\/p>\n\n\n\n If you\u2019re a small business owner and you\u2019re trying to wrap your head around the wider implications of the MTD initiative, there are a few general rules of thumb that you can follow. Here\u2019s what you need to know:<\/p>\n\n\n\n The next big milestone in the history of the MTD initiative will be in April 2020, when it\u2019s due for a wider rollout across smaller businesses. You\u2019re already required to upgrade to a digital platform if your turnover is above \u00a385,000, and if your turnover is below that then you may still need to switch over this April.<\/p>\n\n\n\n The good news is that by switching to an MTD-approved system, you can track your finances more efficiently while simultaneously making sure that you\u2019re in full compliance with the new legislation. It\u2019s better to do that now and to know that you\u2019re ready than for April to roll around and for you to panic. <\/p>\n\n\n\n In fact, if you leave it too late then don\u2019t be surprised if you end up having to pay a premium or sitting on a waiting list as overstretched accountants try to deal with the sudden influx of new customers.<\/p>\n\n\n\n And of course, if you still need help wrapping your head around the MTD initiative, we\u2019d be more than happy to help, so feel free to head to our blog<\/a> to find out more. We look forward to hearing from you.<\/p>\n\n\n\n![\"\"](\"https:\/\/i2.wp.com\/www.invoiceberry.com\/blog\/wp-content\/uploads\/2020\/01\/making-taxi-digital-thumbs-up.jpg?resize=690%2C460&ssl=1\")
<\/figure>\n\n\n\nThe good news<\/strong><\/h2>\n\n\n\n
How the MTD initiative will affect you<\/strong><\/h2>\n\n\n\n
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<\/figure>\n\n\n\nWhat you need to know<\/strong><\/h2>\n\n\n\n
What\u2019s next?<\/strong><\/h2>\n\n\n\n
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