Making Tax Digital: What can businesses expect by John McCaffery

Monday, 14 August 2017
The government plans to enforce its Making Tax Digital initiative by the year 2020. This means that all businesses need to start thinking about how they plan to switch to digital record keeping, in order to make the transition as smooth as possible.

These changes are aimed at making handling tax affairs easier for businesses and individuals. It will replace the need for the current annual tax return and help customers to keep on top of their taxes throughout the year. This will not only help businesses save money on tax repayments, but also take away some of the stress of having to collect and process endless amounts of documents during the major tax periods.

How will Making Tax Digital benefit businesses?

Making Tax Digital is being put into place so that businesses can keep better track of the information that HMRC has. This plan can make managing your tax affairs easier, and could save you a lot of money in repayments.

You’ll be able to log into your digital tax account and edit or amend the information listed, as well as see how much tax you will have to pay when the next tax year comes around. Many businesses are caught out by a large fee from the tax man at the end of the tax year, simply because they struggle to accurately project their final tax repayment.

With this increase in access to information, the government plans to eradicate this stress and make it a more streamlined process.

What are the biggest changes in how businesses will handle tax affairs?

This new government initiative is set to be made mandatory by 2020, which means businesses need to be clued up on what the changes will be and how they should move forward.

Businesses will now be required to use an online accounting software, to help manage their accounting information. This information will be requested by HMRC on a quarterly basis.

Business tax information will become available in real time, which means no waiting around until the end of the tax year. You’ll be able to see your tax balance when you need to, helping to reduce tax repayments.

What can businesses do to prepare for the switch?

It is never too early to start preparing for the move to Making Tax Digital. The earlier you can make the switch to online accounting software, the better. If you use an accountant, book in some time to talk to them about changing to digital tax. Ask your accountant what they need you to do and what records you can start to keep digitally.

For more information on how Making Tax Digital will benefit your business, take a look at this informative infographic from Manchester-based accountant, Alexander & Co.

John McCaffery, Tax Partner at Manchester based accountants, Alexander & Co. Alexander was established in Manchester in 1976 and work closely with entrepreneurs to provide strategic business advice, helping build up their confidence, and assist with business growth.