As most businesses should be aware of by now, HMRC’s new ‘Making Tax Digital’ (MTD) initiative is due to begin in April 2018, where companies are required to report tax digitally each quarter.
At the beginning of this month, HMRC began a pilot program to test out this new digital system. The pilot involves some businesses and agents that have been invited by HMRC to sign up for the trial. It is expected that those participated in the trial would be able to test out the new accounting software to record their business income and expenses and send in summary reports.
The trial is not without its critics though, even the Treasury has raised concerns about the value of information collected by an invitation-only approach. The treasury cited concerns that those companies more likely to be affected by the new MTD scheme could decline to participate. However, HMRC has said that the pilot would involve smaller numbers of companies initially, but later a more substantive trial involving hundreds of thousands of companies would be rolled out prior to launching the new systems.
Amid these, there is a piece of good news for smaller businesses who aren’t VAT registered; HMRC has extended the deadline and you will only need to start filing quarterly digital updates from April 2019. Businesses with a turnover of less than £10,000 will be exempt and not be required to file digitally.
Not invited? You can still trial MTD
For businesses that were not invited to take part in either pilot, you would still be able to use the new software if you wished, to test out record keeping and integration with any existing systems.
In addition, the Chancellor has previously stated that businesses using existing spreadsheet software to maintain their records would be able to continue to do so, but that their software must be able to interact with HMRC’s new accounting software. If not then they will have to change their spreadsheet software to one that is compatible.
An Integration Nightmare?
If you have experienced integrating different IT systems before, then you know first-hand the challenges. We’re concerned that businesses, particularly the smaller ones without any internal IT support, may struggle to integrate their spreadsheet software with HMRC’s new accounting software. If you think this is an area which you need help, talk to us today. We can help.
At Tax Agility, we also understand that MTD may be adding some extra work for you the business owner. It may be a challenge for you to fill out quarterly reports using new software that you aren’t familiar with.
The good news is, our dedicated team at Tax Agility has been helping clients planning for the MTD transition. We work with XERO, a cloud-based accounting software, to prepare our clients of all sizes for a smooth transition. With us, you will get honest discussions free of jargon. There won’t be any hidden agenda or hidden charges.
Give us a call on 020 8780 2349 today, or fill out the contact form.