Companies across the region need to get ready for Making Tax Digital – the Government’s new online tax system – by incorporating online accounting software into their business.
Despite plans to delay the roll-out of the new regime, businesses are being urged to plan ahead so that they are not caught out by the changes that will come into force in less than two years.
It has been revealed that the new system, described by many as the biggest change to taxation in more than 70 years, will begin to be rolled out for businesses above the VAT threshold in April 2019.
For the first year, these businesses will only need to report VAT-related taxes on a quarterly basis online using MTD accounting software or via a spreadsheet fed into similar systems.
Businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020.
Companies, sole traders and landlords below the VAT threshold will still be able to use the Making Tax Digital system on a voluntary basis to record and report their tax affairs.
This differs drastically from the Government’s previous plans, which would have seen all businesses, landlords and self-employed taxpayers with an annual turnover of £10,000 or more register, file, pay, and update their information online each quarter.
While this is a delay to the original timetable, local businesses still need to act now to ensure they have the necessary infrastructure in place and functioning before digital taxation becomes mandatory for a wider range of taxes.
Online accounting packages, such as Xero and Sage, will allow your clients to monitor their performance and collaborate with their professional advisers in real-time. The packages also safe and secure storage of invoices, receipts and other important documents in the cloud.