From April 1st this year, the UK moved into a new era for tax management and collection, called ‘making tax digital’, with the long term aim that all businesses, sole traders and households will eventually manage and file all their tax returns online.
The HMRC initiative will be rolled out over three phases; while Phase One of ‘Making tax digital’ applies to VAT registered companies (those with a turnover of £85,000 or more) smaller organisations and sole traders should already be thinking about moving from paper based account management to digital platforms.
Having worked with several clients to manage the impact this new legislation will have on how they do business, there are some key areas that I strongly recommend organisations preparing for ‘making tax digital’ should consider right now.
- Software companies have used the making tax digital deadline to design and develop online solutions with varying degrees of sophistication, so thankfully, depending on your tax management requirements, there will be a suitable tool for your business. Take advantage of the free trial periods offered by software packages-it’s in their interest for you to try them out and get comfortable with using them. The three main packages my practice has used are Xero, Freeagent and Quickbooks and while each one has advantages, Xero has the most functionality making it an option for growing businesses while Quickbooks is useful for smaller ‘on the go’ sole traders.
- When purchasing software, bear in mind not just where your business is now, but where it’s going. Do you anticipate recruiting more staff or increasing your product/service offering during the next year? If that is the case, choose a software package with more functionality. Don’t forget that like many business support tools, digital accountancy software is tax deductible.
- Get training!! It sounds obvious of course, but you should study the tutorials provided by the software company or your accountant will help you get the most out of your software.
As with every significant change in business legislation, preparation is key and while HMRC is uncertain about the deadline for Phase 2 of ‘Making Tax Digital’, business owners, sole traders and contractors should speak to a qualified tax advisor to help them get MTD ready.
To see how NBAS* could help you and your business business manage the move to digital tax contact accounts@nbasconsultants.co.uk
*I have over ten years’ experience in accountancy, qualifying as a Chartered Accountant in 2011, and have particular expertise in supporting business start-ups, managing corporate and personal tax VAT and PAYE. In 2016, I established NBAS Chartered Accountants to focus on working with businesses and individuals to whom I can deliver real benefits.