If you are a current client of Nabarro Poole Ltd., you can stop reading now. You are ready for Making Tax Digital. We use cloud accounting solutions and these are all approved for MTD. If you are unsure if you are MTD ready, keep reading.
There’s been much controversy around Making Tax Digital. Some believe that it’ll have a negative effect upon businesses, whilst others think that there’s not enough time to prepare for it. As a result, there’s been delays to its implementation, and currently it’s due to come into force by 2020.
The government initiative is certainly quite a change to the system. Companies will need to use software to maintain their tax records and regularly update HMRC, but there’s a variety of advantages that it’ll bring to organisations. Here, we explore the main benefits of Making Tax Digital.
Quicker submission of data
Digitalisation will allow you to input relevant information as you are made aware of it, rather than struggle to remember or find it later on. Take expenses: the data for these can be entered alongside an image of the receipt into cloud accountancy software in an instant, so there’ll be no duplicate expenses or searching for evidential documents months down the line. Cloud software is often available as an app, which means that your accountancy can also be done on the go.
Because you’ll be submitting tax information more regularly, it will be considerably easier to keep on top of it. It also lessens the chance of losing any data as you won’t be waiting an entire year to process it. This should result in reduced errors, especially as cloud accountancy software calculates the figures for you, meaning that there’ll be less risk of you over- or underpaying tax.
Access to real-time figures
As you can input the information in real time, you’ll also be able to see the current state of your accounts at any point in the year. This will allow you to view the amount of tax owed and forecast more accurately, meaning there’ll be no surprising tax bills. If your tax liability is more than expected, then you can figure out ways to reduce it by using tax planning in advance.
With tax in the digital sphere, the amount of paper involved will be significantly reduced. There’ll still be the likes of receipts, but the majority of records will be stored in the cloud. Accountancy software will allow you to submit any paper documents to it by scanning or photographing them, so you’ll be able to view your entire accounts in one single place.
HMRC is already aware of certain data, such as that from third parties including banks and government departments. Rather than telling HMRC information it already knows on your tax returns, it’ll be pre-populated. This means the amount of time you need to spend inputting data will be lessened, so you can focus on your business instead.
With such a transformation in the way accountancy is done, it’s understandable that you may have concerns about preparing for it in time. This is where an expert accountant that already uses cloud software can assist, like Nabarro Poole. We’ve been using accountancy software since 2010, and can help with all aspects of accountancy, including management accounts, budgeting and forecasting, and compliance.
We’ll ensure that you have all your arrangements in place far in advance of when Making Tax Digital comes into force. To bring your accounts into the digital age, contact Nabarro Poole today.