The new Making Tax Digital system will soon launch in the UK and it's set to make taxation far more efficient and effective for businesses. The roll out of the new digital VAT returns solution takes place from 1 April 2019 and it's essential for organisations to put the right procedures in place prior to this date.
Once the entire digital tax system is up and running, organisations and individuals will find it's much easier and quicker to access their records, check vital information and look up real time data. However, ensuring the correct admin processes are actioned before VAT returns are required in a digital format will be essential for businesses of any size.
How Do I Prepare For Making Tax Digital VAT Returns?
When considering the best way to implement the new digital VAT return regulations, your first step will be to take a look at how returns are actioned at the moment. Many companies still maintain manual VAT records, either in handwritten form or on spreadsheets. This can be extremely time consuming to administer. Basically, all account records need to be checked over and the VAT records have to be extracted and recorded in a separate manner.
Making VAT returns digital will ensure that all the sales and purchases recorded in your standard accounting software packages will be transferred over to the digital VAT file and transmitted directly to HMRC on the due dates. You will, however, need to ensure your software is compliant with the new Making Tax Digital regulations. If you have any doubts, you can check on the government website, as a list of approved software suppliers is available.
If you currently maintain VAT records on spreadsheets, you will need to use bridging software that conforms with HMRC requirements. Again, approved bridging software suppliers are listed on the UK government website.
Briefing Finance & IT Teams Before Implementation
Once employees have been thoroughly trained in the recording and submitting of digital VAT records, they are sure to find it's much simpler and saves a good deal of time. However, it is vital that business leaders ensure all finance teams have been thoroughly briefed on the new requirements and that IT departments are aware of the best software for this purpose, such as Xero.
Making Tax Digital will speed up taxation services in the UK and business organisations will find it much easier to access real time accounting information once the entire system is up and running.