Updated: Apr 24, 2020
Making Tax Digital (MTD) was introduced on 1 April 2019 for businesses and companies who had a Turnover of over £85000 and was VAT registered. However, the Government has confirmed that at the latest by 6 April 2022, and could be as early as 5 April 2021, Self-employed taxpayers and landlords will be required to use MTD compliant accounting software to record income and expenditure and will update their digital tax accounts quarterly.
Tax returns will be replaced by online “digital tax accounts” which will be pre-populated with information HMRC already hold. The HMRC initiative on Making Tax Digital is designed to make the UK Tax System effective, efficient and easier for taxpayers.
The 5 reasons why we at Beach Accountants Ltd think you should use it to improve your business rather than seeing this as compulsory is as follows:
It does Automated Daily Bank feeds, therefore eases bookkeeping
You can prepare sales invoices and reminders, so easier to chase outstanding invoices
No IT installation or maintenance, as it is in the cloud
There are unlimited users and your accountant can get access to your files anytime
But the MOST IMPORTANT is that you can use it
On any Device
Cloud Accounting software has the following advantages-
Aim for Paperless
No more files to hand into the Accountant
Copy of Receipts backed up behind the entry in the Accounting software
You can see how your business is doing in Real Time
Business, Cash Flow and Tax planning can be done much easier.
To illustrate, using a real-life example, a client called saying that all he seems to be doing is paying out lots of money to staff, HMRC and suppliers and that there does not seem to be any left for him at the end of the day.
This business owner had recently moved to a cloud accounting software solution 6 months earlier, so all the data was available immediately and in real-time. Within an hour of his phone call, the business owner had 5 ways to assist his cash flow and profitability and 3 days later, once he had implemented these changes, he found that he was saving an average of £500 a week.
Had he been giving his accounts once a year like he was previously it would have taken a minimum of 3 weeks, to get the information from him, produced a set of management accounts to then have a chance to go through the figures and find where he could save money.
It is about making your business and company more efficient so that your accountant is not just producing accounts to submit to the HMRC and advising you of your tax bill, it is about getting continual assistance and business planning with your accountant on real-time data, be that every month or every 3 months.
It is a great business planning and survival tool, to help you through difficult times like the Coronavirus, by having easy access to Cash Flow Statements, Debtor and Creditor listings and being able to claim for Loan and Grant funding.
Here at the SaveOurSME campaign - we have FREE cloud accounting software that we're giving away to everyone that requests it. For more information on this offer, please email firstname.lastname@example.org with your name and contact number and one of the team will be in touch will you quickly.