We recently discussed the benefits of Making Tax Digital (MTD), but with the changes unlikely to come into force until at least 2020, how can you start embracing and preparing for the government scheme now?
Here, we explore a few steps for getting far ahead of MTD before its implementation date.
Talk to clients and software providers
The digitalisation of tax means that the way you deal with clients is likely to change. This could be switching from paper invoices to those that are digital, or altering due dates. In order to not suddenly burden your clients, it’ll help you both be organised if they’re aware of your plans to change the current process in advance. Remember, they will need to prepare for MTD too, so will have their own business to consider.
You should also speak to your cloud accountancy software provider and see what they’re doing to prepare for MTD. Ask if there are any specification features they will be introducing, how they plan to simplify tax submission, and when everything will be in place. If you use software through an accountant, then they should be able to provide you with the information.
Start digital recordkeeping
Use the time between now and the MTD implementation date to get familiar with cloud accountancy software. Start by keeping only digital records. If you currently receive anything in paper format, see if this can be changed. Digital receipts for some expenses like subsistence aren’t widespread yet, but you can scan or take photos of them to upload to the cloud.
The sooner you get used to keeping digital records, the smoother the process will be when MTD does come around. By having all your accounts in one single place, you’ll also be able to view the complete state of your business’ finances at a glance. Take the time to understand the data available, and it will be less of an undertaking when MTD comes into force.
Participate in pilots
If possible, see if you can take part in pilots like the Making Tax Digital pilot for Income Tax. This will provide you with the best possible visibility of what MTD will be like in practice, and also offer you the opportunity to give feedback to HMRC. If you find yourself struggling to understand how it works, ask your accountant for help.
By testing out the use of software to report on your Income Tax, you’ll be able to see an estimate of the tax owed in real time. This can help you keep on top of your cash flow and forecast your future spending. When you adopt MTD sooner, your business can reap the rewards earlier.
Prepare for MTD with Nabarro Poole
Whilst your business can benefit from MTD, budgeting, forecasting and tax planning can take up a lot of time you may feel could be better spent elsewhere. You may also not be as confident as you’d like with these aspects of your accounting. An expert accountant like Nabarro Poole can assist. We already provide cloud solutions that are approved for MTD.
We can also offer monthly and quarterly accounts, as well as business advice. To find out more about how we can help you prepare for the digitalisation of tax, get in touch with Nabarro Poole today.