As we welcome in a new year, we find ourselves in the midst of a huge technological movement within the accounting and finance industry in the UK – as the sector undergoes the digitisation of it’s tax system. Now if you are British business owner and that sentence alone caused a serious acceleration in your heart rate, don’t worry, Total Accounting are here to unravel the mystery of Making Tax Digital (MTD), just in time for its implementation on the 1st of April.
How will this impact your business
Currently within the UK, over 70% of small businesses manage their tax by manually logging their VAT figures on the HMRC website but in just a couple months time they will no longer be able to do so. Instead, businesses must upload a digital file of their tax records to the HMRC database from a cloud accounting software of their choice. This is all part of a governmental objective to make tax more simple to understand and manage for individuals and businesses alike, and ultimately allow everyone to stay on top of their financial prospects.
Expectantly with any significant change – especially one which centres around technology – there is a degree of resistance and reluctance to the implementation of Making Tax Digital. Many business owners do not feel entirely comfortable entrusting their sensitive financial information to this type of software, and in fact as much as 40% of UK business owners are not even aware of the impending arrival of MTD. This is a particular sticking point for those in traditional industries, like agriculture, or businesses which have successfully operated for generations with no intrusion from technology and are daunted by the prospect of getting to grips with alien software. But fear not. Allow us to shed some light on what Making Tax Digital means for your company.
Benefits of MTD coming into effect
Firstly, it means an end – or at the very least a huge reduction – in tax-related mistakes. All UK business owners have had the painstaking job of trying to grapple with their company taxes and submit them all on time. It’s a complex and time-consuming process but with the digitisation of this process, the intelligent software implemented takes care of it for you. Simply log in and see your tax balance as it stands at any time. The technology is more accurate, efficient and timely than any individual could be and means that your business isn’t faced with unwanted fees for late submissions or mistakes. It’s win-win really!
There’s also the small topic of paperwork. Consider that forever growing pile of tax paperwork and receipts piling up in that dark corner of the office no more with MTD. Cloud software streamlines your taxes so that is all in the one place which is easily accessible and allows you to visualise where you stand with your taxes at a glance. All you have to do is update your software with the required information and ensure that all data is correct every quarter and you can consider your taxes sorted. Not to mention, the resultant reduction in paper use and waste from Making Tax Digital which will have a significantly positive impact on the environment.
Cost of MTD to your business
It has to be stated, as you probably anticipated change often incurs a cost, and in the case of Making Tax Digital this cost presents itself in the form of a required investment into upgrading or purchasing new accounting software. As well as this staff training is needed to familiarise everyone with the new system, as is software set-up and pre-purchase research into the most functional and economical software product available on the market. However, we firmly believe that digitisation is the modernisation the industry needs and will result in a much more tax-savvy economy which will be to the benefit of everyone.
As there is no standardised software available from the government to enable MTD, business owners must take advantage of existing products and that’s where we come into the picture! Total Accounting are pioneers of digital accounting and with our unique cloud accounting software, we have the expertise to ensure that the introduction of Making Tax Digital is a seamless process for your business this April.
For more information call us today on 0141 887 7766.