cheltonian business MakingTax Digital
FromApril 2019, the government is making fundamental changes to thewaywe complete our tax returns by introducing a new ‘Making Tax Digital’ system. MikeEllis FCCA, Managing Director at TheCotswoldAccountants, gives his advice on what business owners need to knowahead of the technological takeover.
Let’s face it, tax administration isn’t themost exciting of prospects. Although givenmy standing as an accountant I probably shouldn’t say it, it’s something I hear time and time again frombusiness ownerswhosee it as a dreaded annual chore. That’s why, from1stApril this yearHMRCwill be introducing a new systemthat makes managing your tax returns more efficient, more effective and,most importantly, easier to get it right.
So,whatdobusinesses need toknow? For some, the new Making Tax Digital schememay seemdaunting – but it really is quite simple. The new schememeans that all
VAT registered businesses or companies with a taxable turnover above the £85,000threshold will need to start keeping records digitally and submitting returns using software - if they aren’t already of course.We recommendusing a programmesuch as Xero to keep on top of all your bookkeeping. This makes it easy to manage your business affairs, with clever features such as being able to photograph and store your receipts online as part of the package. It’sworth checking theHMRCwebsite for a list of compliant software products if you’re unsure.
42 MARCH/ APRIL 2019 THECHELTONIAN
If you’re not confident using this
sort of technology or admit to giving your accountant a bag of receipts at the end of the year, then don’t panic. Any Xero certified advisor can turn the paperwork, however disordered, into tidy digital records before the deadline.
What if your business doesn’t fit intothis category? If your business is registered forVAT but has a turnover belowthe threshold, there will be an automatic exemption. If you elect for the exemption not to apply, you can choose to keep records digitally and submit yourVAT information under Making Tax Digital. Businesses that are belowthe £85,000turnover threshold or are notVAT registered can continue to use theHMRConline portal to file their tax returns until April 2020. After this point, they will also be introduced to the Making Tax Digital scheme.
Howwill MakingTax Digital benefit businesses in Gloucestershire? By keeping all records online and filing tax digitally, you can regularly check your income, expenses and business profits. This ‘real time’ intelligence can then help youmake better business decisions throughout the year.
When is the best time tomake the digital switchover? At TheCotswoldAccountants,we are advising our clients to start at the beginning of their new financial year.Certainly, the earlier you start, the easier it will be to plan and manage.
Totalk toTheCotswold Accountants about Making Tax Digital, or any accountancy needs for your business, visit
www.thecotswoldaccountants.co.uk toarrange a free initial consultation.
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