The UK government will shortly be rolling out the Making Tax Digital platform for VAT, so any VAT-registered business with turnover above the threshold needs to start preparing. The rollout of Making Tax Digital for income tax purposes has now been postponed to 2020. Businesses of any kind will discover lots of benefits associated with this new digital system and some of these are highlighted below.
When Will I Need To Make Digital VAT Returns?
1 April 2019 is the start date for the new Making Tax Digital VAT returns and businesses will be required to make digital VAT returns from this date. It's important to ensure the accounting software or spreadsheets you currently use will be acceptable to HMRC and there is a guide to approved software providers on the government website.
Benefits Of The New Making Tax Digital Regulations
As the new VAT requirements roll out and accounting departments become more familiar with the requirements, quite a few benefits of the new digital system will become more apparent. These benefits will snowball once the entire system is up and running.
Some of the likely benefits include:
It will be a real boost for any finance or business executive to have the ability to check VAT returns and HMRC data while out and about and this is easily possible using this new digital system.
2. Real-time Information
Once the entire digital system is up and running, businesses will be able to access real-time data on all taxation which gives instantaneous knowledge about how much tax needs to be paid.
3. Digital Record Keeping Is More Convenient
Once this new cloud system is in place, businesses can interact with HMRC at the most convenient times. It will also become obvious over time that cloud-based tools help business growth and increase profitability.
4. Just One Account For All Business Finances
The Making Tax Digital system means business users will have just one account for all their HMRC interactions. This will make it far easier and quicker to obtain an accurate overview of finances.
5. Errors Will Be Reduced
The government has set a target of cutting down mistakes made on tax returns, as these cost up to £8bn annually. And, furthermore, £3.5bn of this total relates to VAT alone.
It can be seen from the above that the Making Tax Digital system will speed up business returns considerably.