HMRC are implementing Making Tax Digital (MTD) to streamline the way businesses report their finances, bringing with it a bank of new software, regulations and questions.
According to the Making Tax Digital Monitoring Businesses’ Awareness of MTD report little over 6 weeks ago , 20% of VAT registered businesses still have no idea when they plan to sign up, and 11% still do not know what MTD is.
Now that we have passed the starting line of the 1st April, it is important to get our heads out of the sand and into the cloud.
There are two very common misconceptions of MTD that prevent businesses from registering:
- That MTD is optional
- That it is a fruitless and expensive endeavour
Neither of these factors are true.
There is a reluctance to sign up to MTD because many assume that they do not need to or simply don’t want to – but this is not the case. If you are a VAT registered business with a taxable income above the VAT threshold of £85,000, then you are eligible for MTD and will be affected. Compliance is not an option.
What is most often overlooked by business owners is that you are not automatically signed up to MTD. You must first register to MTD on HMRC’s website before signing up to a system, otherwise you still remain uncompliant.
MTD is a part of a larger plan and this is just the first wave of implementation. Ultimately, HMRC plan on making all tax digital, next being self-assessment.
For the time being, there are exceptions. Public sector, ‘not for profit’ organisations and businesses with more complex tax requirements have until October 2019 to sign up. If this is you, you will have been notified – but if not, you can request an exemption from HMRC and be able to provide evidence of this.
With regards to financial concerns, it has been reported that 33% of business owners are fearful of the added expenses MTD-certified software will bring. However, with so many different systems on market to choose from, the right system can be found at the right price and can actually add value to your business.
In our own experience, we have found QuickBooks to be the easiest and most beneficial software to use, which is why we cover the cost of our clients’ subscriptions!!
In fact, we are not the only ones. Customers of NatWest and the Royal Bank of Scotland can sign up free to FreeAgent, proving that MTD-certified software doesn’t necessarily have to be expensive.
There are obviously monthly fees to use a system, but this should not be seen as a cost as much as it is an investment. MTD-certified software can speed up your daily bookkeeping and reporting process by a third, adding value to your business by saving time and improving efficiency, productivity and accuracy of figures.
From there, we can help you through the onboarding process, offer software training support and even take complete control for you, so you don’t have anything to worry about.
We have helped many of our clients move to cloud accounting, ranging from one-man bands to multi-million-pound turnover businesses, and they haven’t looked back. They have found the digital transition to be smooth and the software straightforward, with common feedback highlighting the amount of time it saves them.
Many business owners think that MTD is a hinderance, but can be a huge benefit to your business with the right guidance. There are costs, which are to be expected, but the software is designed to streamline the process and, in the long-run, reduce the risk of common mistakes, ensure compliance and save you significant amounts of time and money.
Don’t think of MTD as a burden, think of it as developing your business.
If you have any further questions, would like to discuss any other MTD-related concerns or would like to hear more about our services, please contact our helpful team to find out more – we would love to hear from you.