The new Making Tax Digital system is likely to make the UK one of the most advanced digital taxation economies in the world. Although organisations may resent the raft of changes they'll need to implement in order to comply with the new regulations, experts have said that Making Tax Digital is likely to provide a considerable boost to productivity.
Introduction Of Making Tax Digital For VAT Return
The 1 April 2019 initial VAT rollout will affect any UK VAT-registered organisation with turnover above £85,000 and it will be necessary to submit digital VAT returns from this date. Although many businesses will need to upgrade their accounting software to handle the requirements of digital VAT returns, this challenge will be well worth the effort.
Business technology is moving at an ever-increasing pace, and organisations that fail to maintain momentum may well also find their productivity and profitability starts to drop. Some of the ways that the new digital returns will increase productivity include:
1. Switch To Digital Accounting
It's still the case that many smaller businesses simply pass over bags or boxes of receipts and invoices to accountants on an annual basis. Maintaining digital financial records is essential under the Making Tax Digital (MTD) system. And, businesses will need to upgrade business accounting software to meet the requirements. Once employees are fully educated in digital record keeping, official returns will be much quicker and easier to implement.
There won't be any more need for double bookkeeping for maintaining and submitting VAT records, as all relevant data will be extracted directly from the MTD-approved software. Business leaders and finance directors also benefit from digital accounting, as it is quick and easy to obtain a real-time financial snapshot indicating business health at any given moment. This makes it simpler to identify the exact financial position of the organisation, which leads to improved efficiency and enhanced productivity at all levels.
2. Digital Record Keeping Works Out More Affordable
Keeping digital records is a secure way of maintaining financial information when the right software is utilised. It can also cut down on IT costs and finance department costs. It also allows approved employees to access data from mobiles or laptops, wherever they happen to be.
3. Enhances Business Growth
Switching to digital record keeping means embracing cloud services to the full. Use of cloud accounting can help businesses grow by automating or simplifying many of the procedures used. This helps save time for finance professionals and ensures control of all critical financial data.
4. Digital Accounting Cuts Errors
It's easy to make errors when making manual tax or VAT returns. These can be avoided when digital financial systems are in place.
MTD will also have an impact on the way your business reports corporation tax and collects taxes via the PAYE system. Once the new system is fully implemented, you will be able to access all your official business records within just one UK-government registered account. Although you may need to change your entire accounting structure to accommodate the requirements of MTD, the benefits accrued over the longer term are sure to enhance the efficiency of your business and financial record keeping.