The HMRC has indicated that by 2020 there will be a digital tax system.
Making Tax Digital is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs – meaning the end of the annual tax return for millions. Digital record keeping software will be linked directly to HMRC systems, allowing customers to send and receive information directly from their software.
Eventually paper records will no longer be sufficient and it will become mandatory for almost all businesses (self-employed, partnerships and limited companies) and landlords to use accounting software or an electronic spreadsheet to keep accounting records. The day will come when paper accounting records will cease to meet the requirements of tax law. It is important that SMEs are ready to meet the requirements set out by HMRC along the way.
Here are our five tips for making sure you and your accounting system is ready:
TIP 1: For SMEs is it imperative that your operating system and accounting software is set up to create records and store data in a digital form.
TIP 2: Check your accounting software is set up to function over the cloud and has the capacity to be accessed and updated using mobile devices.
TIP 3: Make sure you have a secure internet service and your team are trained to use data over the internet safely and securely.
TIP 4: To meet the first deadline ensure your system can create a VAT return from digital records and provide HMRC with VAT data on a voluntary basis.
TIP 5: Make sure your software partners have a product road map for updating your software to comply with a digital tax system and ensuring it will include necessary adjustments to keep up with developments from HMRC. Your software needs to be able to receive information from HMRC via the API (application programme interfaces) platform. This will allow HMRC to send ‘nudges’ to the business/agent. Check for the Making Tax Digital (MTD) list of compatible software on the HMRC website.
Read our BLOG >> Getting ready for Digital Tax for business
For further information contact Synergy Technology on 0345 456 0050.