From April 2019, VAT-registered businesses above the current £85,000 VAT turnover threshold must be ready to maintain their financial records digitally and be able submit their VAT returns directly to HM Revenue & Customs using compatible software.
The reason for this is the introduction of HMRC’s Making Tax Digital for Business, which despite the odd delay is still on track to give the tax payment system its biggest shake-up in decades.
However, recent research by software provider Intuit QuickBooks revealed that 41% of business owners in the UK have never heard about Making Tax Digital (MTD) and of those who had, 76% are finding it difficult to understand how it would affect them.
Will Making Tax Digital affect you?
Many businesses therefore are in the dark that the way they keep their financial records and the software they are currently using will most likely need to change. HMRC is not intending to offer free software, but instead is working with commercial software developers to develop a range of applications that will help businesses to keep their records digitally and integrate with HMRC systems.
Those taxpayers who are already familiar with using desktop software for bookkeeping may have to make an upgrade to remain MTD-compliant. While this means an additional cost and inconvenience initially, the potential benefits of changing to a more user-friendly and efficient software will save you time and money.