If you’re a business owner in the UK, chances are you’ll have already heard about the government’s Making Tax Digital (MTD) initiative. This has been introduced to make it easier for companies of all sizes to file their tax returns, make payments to HMRC and cut down their chances of submitting the wrong information.
Under MTD you can no longer upload your tax returns by XML or by post. Instead, you’ll need to keep digital records of your finances in MTD-compliant software that connects directly to HMRC.
HMRC aren’t providing their own software for MTD because it’s simply too big a job for just one developer to handle. Instead, HMRC are relying on a number of approved MTD software developers.
SPONSORED: Find a Qualified Financial Advisor
1. Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes.
2. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals get started now.
But how do you know what makes software “MTD compliant”? And, more importantly, is your company’s current tech compliant with the rules? We’re here to help answer these questions.
What are HRMC’s rules around MTD software?
To comply with MTD regulations, your accounting software should be able to:
- record your business’s details and all VAT-related transactions for up to six years
- include the date and additional information about any VAT paid or withheld for each transaction
- calculate what VAT you owe based on your incomings and outgoings
- submit your VAT return directly to HMRC via an API (application programming interface)
Why your business should stop using spreadsheets to comply with MTD regulations
While you can continue to work with your own spreadsheets, you’ll need to have MTD bridging software to connect them to HMRC, via their API. This is a way of making your system “talk” to the taxman.
If you think that sounds complicated, consider migrating your bookkeeping to MTD-compliant accounting software like QuickBooks. It can handle and automate all of the calculating, tracking and filing of your VAT in one place.
The benefits of switching to Making Tax Digital software
Making the switch from spreadsheets to Making Tax Digital software will give your business instant benefits, as well as full compliance with new regulations.
- Make your accounting more accurate QuickBooks’ HMRC-recognised Making Tax Digital software for VAT will do all of your tax calculations for you. By removing the potential for human error, you’ll have a far lower chance of submitting inaccurate information, avoiding any hefty HMRC fines.
- Always know how your business is doing Through your QuickBooks dashboard, you’ll see all your incomings and outgoings in one place, and your information is accessible online or on your mobile at any time. Make accurate projections and track your cash flow in a flash, wherever you are.
- Save time Because MTD software like QuickBooks is so easy to use, you won’t need to spend precious hours of your time reconciling your accounts each month.
- Never lose a receipt again Do you sometimes struggle to keep track of your business expenses? With MTD software in place, you simply need to take a picture of your receipts and store them in the appropriate folder. They’ll never get lost again.
- Simplify your invoicing tools If you or any member of your financial team works remotely, having the right invoicing software in place will let you create and send digital invoices on the go. You can even track outstanding invoices and send personalised reminders to your clients if you need to.
- Integrate your payroll On top of the other benefits, there’s a whole area in QuickBooks which is dedicated to your employees, so it’s never been easier to keep up with payroll.
How will QuickBooks’ MTD for VAT software help me?
Intuit QuickBooks features on HMRC’s list of approved Making Tax Digital software companies, so if you’re on QuickBooks, making the jump to MTD won’t be an issue.
Whether you’re a small business owner, an accountant, or bookkeeper, we’re on hand to answer any questions you might have about moving to MTD. With award-winning support which includes phone advice, web chat and online resources, we have everything you need to make sure your business is MTD-compliant and ready to make the jump.
This article originally appeared on The QuickBooks Resource Center and was syndicated by MediaFeed.org.
Featured Image Credit: DepositPhotos.com.