HM Revenue & Customs (HMRC) are forcing businesses to keep digital records with a computerised bookkeeping system. This will soon be becoming compulsory.
There is a background to this, with information here. 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.
HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world. Making Tax Digital is making fundamental changes to the way the tax system works – transforming tax administration so that it is: More effective, more efficient and easier for taxpayers to get their tax right.
The majority of customers want to get their tax right but the latest tax gap figures show that too many find this hard, with avoidable mistakes costing the Exchequer over £9 billion a year. The improved accuracy that digital records provide, along with the help built into many software products and the fact that information is sent directly to HMRC from the digital records, avoiding transposition errors, will reduce the amount of tax lost to these avoidable errors.
The primary legislation for Making Tax Digital relating to VAT and Income Tax is contained in the Finance (No.2) Act 2017, providing certainty about the broad framework in which Making Tax Digital will operate, with secondary legislation for VAT laid in February 2018, coming into force from April 2019.
VAT is changing too: HMRC have taken a major step forward in this ambition with the introduction of Making Tax Digital for VAT. Many VAT-registered businesses with a taxable turnover above the VAT threshold are now required to use the Making Tax Digital service to keep records digitally and use software to submit their VAT Returns.
Some businesses and agents are already keeping digital records and providing updates to HMRC as part of a live pilot to test and develop the Making Tax Digital service for Income Tax. We can help you to get on board.
We can provide advice, training and support on all major software packages. Alternatively, we can take the whole bookkeeping process away from you allowing you to concentrate on running your business! Please Contact Us today for help.