On 1st April 2019, HMRC will introduce Making Tax Digital (MTD) for VAT-registered businesses with a taxable turnover above the current rate of £85,000. Following this, MTD may be extended for Income Tax and Corporation Tax, from 2020 at the earliest.
MTD will mean that businesses will no longer be able to keep paper records and will have to submit their tax information digitally, using MTD-compatible software. It’s mandatory to comply and whilst there will be a soft landing for the ﬁrst year, the government will penalise those on a points based system after that.
Working digitally will give businesses better visibility into their ﬁnances and reduce errors from manual record keeping. With just months to go, press coverage has highlighted how many businesses remain unprepared for its introduction, calling for a delay for its launch.
MTD will certainly mean reorganisation for the businesses which fall under its remit and especially those who are not yet using cloud accounting software. A small amount of businesses can apply for an exemption or deferral to October 2019, including some public sector businesses and not-for-proﬁt organisations. (A breakdown of these exemptions is clariﬁed here.)
However, for everyone else, MTD will go ahead. And despite the furore, its introduction represents a golden opportunity for those practices who can prepare their own practice in time and pull together a strategic service oﬀering to help businesses make sense of the new laws and comply by April.
The legislation isn’t complex, however practitioners will need to know it in detail to advise clients. Government resources, such as this overview published by HMRC and this webinar series from the ICAEW may be helpful.
For those ﬁrms currently putting together an MTD strategy, they should:
The introduction of MTD heralds a time of change and should be celebrated. It will give those businesses which are still reliant on paper, the push they need to work digitally and become more eﬃcient.
However, April is fast approaching and the accounting ﬁrms preparing now for the deadline are the ones who will gain the most. As well as having the time to prepare their existing customers for the changes afoot, they will also be able to win the lion’s share of new business from those ﬁrms looking for an accountant to guide them through the new legislation.
Technology is at the heart of MTD, so use this opportunity to upskill your employees and update your own IT infrastructure in order to future proof your practice for next April and beyond.
Keeping digital records with AutoEntry
AutoEntry is an award-winning solution which serves over 2,500 accounting practices worldwide, with over 70,000 small business users set up on the platform. AutoEntry helps business owners become more productive and proﬁtable, by eliminating the error prone and labour-intensive task of bookkeeping data entry. The solution works by capturing and analysing scanned and photographed paper documents, including sales and purchase invoices, bank and credit card statements, bills, receipts and more, accurately automating this information into accounting software.
By using AutoEntry and leveraging automation, businesses can save time, reduce costs and drive a competitive edge in their industry, by focusing less on paperwork and more on growing their company. They can also enjoy the beneﬁts of a ‘green’ and less cluttered oﬃce space, with client data stored securely in the cloud.
By providing the software to keep compliant digital records, AutoEntry is the perfect solution for those accounting and bookkeeping practices looking to prepare for MTD.
Join the AutoEntry Partner Program
Our partner program is helping more businesses prepare for MTD, by getting ﬁrms up to speed on the beneﬁts of digital working, whilst providing the software to make compliance easy. Open to all UK accounting and bookkeeping ﬁrms, the program oﬀers generous incentives, based on the number of clients a partner signs up to AutoEntry. Partners can oﬀer clients substantial discounts when using AutoEntry, as well as earning cashback based on how much these referrals leverage our software. For more information, contact us today.