Peace of mind in a taxing time
Making Tax Digital (MTD) will be at the forefront of the minds of business owners and advisers over the next few months but what is it all about?
MTD is the idea that all your business transactions will flow seamlessly to HMRC by electronic means at the press of a button. Enabling HMRC to estimate your tax liabilities throughout the year instead of many months after the end of the tax year or your business financial year.
When does it start?
For the majority of dental businesses, there is no need to panic just yet. MTD is kicking off with one tax only, VAT. If you are a VAT registered business with turnover exceeding £85,000 per year then you will have to meet the requirements of MTD when submitting your first VAT return covering the period from 1 April 2019. Some businesses such as charities, VAT groups and public sector entities have been deferred until 1 October 2019 to enable some of the complexities to be ironed out. Other taxes will not be included until 2020 at the earliest .
What are the requirements?
MTD means you must keep your accounting records in a digital format. This means using dedicated accounting software such as Sage, Xero, Quickbooks or even an Excel spreadsheet to record transactions, just not a manual cash book. The software must be compatible with HMRC’s system to transfer information electronically. If you are using a spreadsheet you may need to use ‘bridging’ software to make that link.
What do I need to do now?
You need to ensure your existing accounting software is compliant with MTD. If you don’t currently use software then you may wish to consider doing so. Speak to your accountant who can recommend the best option for you or alternatively prepare your accounting records and make the MTD submissions for you. Do you want to spend your spare time book keeping or growing your business?
How will it benefit me?
From a compliance perspective there is no real benefit of MTD. However, improving technology offers us so many opportunities to work more efficiently and collaboratively and at the same time cuts down the paper trail. Accurate and up-to-date record keeping allows real time management of your business finances and tax planning. MTD may be criticised for being mandatory but it will move us forward to where we might have voluntarily chosen to go
For more information or advice, please contact Louise Grant, Head of EQ Healthcare (firstname.lastname@example.org) on 01382 312100.