Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
BLOCKCHAIN INVESTMENT PRIMER - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20
MUST WATCH Before You Waste Money on Buying A New PC Computer System - 27th Nov 20
Gold: Insurance for Prudent Investors, Precious Metals Reduce Risk & Preserve Wealth - 27th Nov 20
How To Spot The End Of An Excess Market Trend Phase - 27th Nov 20
Snow Falling Effect Christmas Lights Outdoor Projector Amazon Review - 27th Nov 20
4 Reasons Why You Shouldn't Put off Your Roof Repairs - 27th Nov 20
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

What Is Making Tax Digital and Why Should Businesses Care?

Companies / Taxes Apr 11, 2019 - 07:46 AM GMT

By: Submissions

Companies

Tax is an inevitable part of conducting business in the UK that all companies must comply with, for better or worse. It provides for public services that we all make use of, and if we don’t meet our obligations in a timely manner and ensure our figures our correct, we are subject to fines. In 2018, the number of individuals late for their tax returns reached 746,000, all of whom may have been subject to a fine of £100, and more if the period of lateness is over three months. Fines are also levied in the case of intentional and unintentional errors made.

But everything could be set to change with a new tax management system that the HMRC in in the process of implementing, which should ensure that greater convenience is brought to businesses in the keeping of tax records, as well as saving time and resources funded by the taxpayer.


How will the system work?

The simple answer is that tax is going digital. This should be no surprise in a world that is ever more internet-based by the day, and there are many who have been anticipating the upgrade for years. By making all records digital and submitting online the taxpayer will be able to make their tax returns with greater ease and reduced expense.

This means that for those businesses that are still keeping accounts on paper, there will need to be some changes to certain practices and procedures. When the changeover has been made, paper records will no longer be accepted, so existing ones will need to be scanned and uploaded as PDF or jpeg files.

Tax records and submissions will need to be managed in conjunction with government approved software, which the HMRC have been working with third parties to develop. There is a long list of software providers with a range of different features to choose from, so users can decide on the one that works best for them. Most of these can also be used on mobile devices to make access easier.

For those that use spreadsheets for their records, the format will need to be MTD-friendly, but if this is not possible then certain ‘bridging software’ can be used to make the conversion. For a limited period, users will be able to copy and paste records into the HMRC system to make the transition easier, but ultimately the correct software will need to be employed.

Another change that the new system will bring in is that tax returns will need to be submitted quarterly, rather than annually as before. HMRC explains that this is to introduce more continuity and accuracy into tax records.

When will it begin?

The scheme has already been introduced – from April 2018 – but only on a voluntary basis. It is compulsory from 1st April 2019, but only for businesses with a VAT turnover of over the VAT tax threshold, which is currently £85,000. This means the majority of UK businesses will be mandated to the new system, and this first phase of Making Tax Digital is only for VAT functions.

There are some exemptions to the rules, namely government bodies, charities and those that have difficulty in using digital tools for a number of reasons.
 
How will this affect us?

As it is more likely that business records are already in digital format, the changes will probably be integrated into business practices relatively easily. However, these adjustments and alterations should not be overlooked, and businesses and individuals that have the chance to upgrade in the period in which it is voluntary, should take the chance to do so to avoid any difficult issues later.

While businesses below the VAT tax threshold are not required to go digital yet, the changes to business should be taken on board gradually for minimal negative impact. With the help and advice of good small business accountants, the changes that the new system will bring about can be less disruptive for every business.

HMRC has not yet announced the dates that other areas will go digital in the future, but it is expected that it will be made mandatory for all businesses to submit digital VAT functions from April 2020. There is also currently a voluntary scheme for income tax available, as well as an MTD for individuals project in place. It seems inevitable that these will be mandatory at some point in the near future, and corporate tax will follow soon after.

With all of these changes to the system of tax records and submission, it is clear that businesses and individuals would be best advised to make all the necessary changes sooner rather than later. In this way, the new procedures can be made more familiar, any potential problems can be avoided, and most importantly, other areas of business can be given more attention.

By Zak Gottlieb

© 2019 Copyright Zak Gottlieb - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules