Unless you pay no attention whatsoever to modern taxation changes, you may be aware of changes to come in the tax industry. For years now, the tax industry has undergone a transformative change thanks to the increase of mobile technology and internet connectivity. Once a system that was dealt with by pen and pad, today we can do much of our taxation online. Soon, though, HMRC will be moving to the new Making Tax Digital scheme – or MTD.
Some companies will, as of April 2019, have to take part in the process. This is going to include most companies who pay VAT. The majority of people who will need to get used to using MTD, though, are those in the professional services industry. For example, those in the finance industry will need to quickly learn about how to use MTD for VAT as soon as is possible.
April 2019, then, is the starting deadline for all VAT registered businesses to be ready to move into the industry. However, please be aware that any business with a turnover above the VAT threshold – sole trader or otherwise – will need to take part in MTD from April 2019. However, some more complex business industries are going to receive a six-month deferral to help you avoid getting too confused.
At the moment, though, there is no definitive list on the deferred industries. We recommend that you look to contact HMRC as soon as you can to find out what kind of changes you might need to make in-house to help accommodate the changes to come.
If you are a business that is going to be working outside of the VAT threshold, though, you will be expected to take part in MTD from 2020. This will see income tax and corporation tax taken into MTD, and as time goes on it will likely become a taxation service for every business.
Making sure you are MTD ready
The most important thing you can do just now is to start finding MTD compliant software. Many software tools for your books will be updated, but HMRC will now only accept accountancy programs which operate under MTD requirements. As such, you might find the software that you have used for recent accountancy sessions will no longer be accessible.
If that is the case, then you need to find MTD compliant accountancy software as soon as you can. Such tools are becoming commonplace, but you cannot delay in finding a solution to start using. Whether you are due to be enveloped in MTD in 2019 or 2020, preparing ahead of time makes perfect sense as it will allow you to stay in total control of the wider experience.
Keep that in mind, and you should be able to ensure that you are fully ready to take on the challenges – and receive the benefits – of Making Tax Digital. Don’t delay, as the deadline will creep up on you much faster than you may realise.