So what is Making Tax Digital? It is a UK government led initiative targeting a fully digital tax system by 2020. Known as Making Tax Digital, the scheme is aimed at bringing tax services fully online and enabling businesses and individuals to access all their tax information, digitally, in 1 portal. In its Making Tax Digital roadmap, HMRC state: “it is about transforming the UK tax system into something that feels completely different.” In a nutshell Making Tax Digital is about seeing all your tax in 1 place.
What does Making Tax Digital Mean for my Business?
In its Making Tax Digital roadmap, HMRC highlights it’s 4 Foundations of Making Tax Digital:
You will only have to provide information once and you won’t have provide information HMRC can get from other sources (e.g. banks and other government departments);
2. REAL TIME TAX:
You will report no less frequently than quarterly and therefore avoid a large build up of liabilities months late;
3. SINGLE ACCOUNT:
Your tax account will include information on all your business’ tax affairs in 1 place; and
4. BETTER INTERACTION
You will use accounting software to manage your records and send information and payments to HMRC.
In summary you will experience less hassle in submitting tax returns, you will save time and costs in doing so and you will have access to tax information much earlier, allowing you to budget within your business better.
The upshot of Making Tax Digital
So the upshot for your business from the Making Tax Digital changes is that, as a business owner, you’ll be required to use digital tools, such as software or apps, to keep records of your income, expenditure, profits and tax positions. Whilst HMRC will ensure that basic apps and software products are available, a business wishing to truly embrace Making Tax Digital should choose to use more comprehensive commercial software, like Xero. This system will link directly to HMRC and allow you to work in real time with an Accountant who can advise how to grow your business.
The Making Tax Digital Opportunity
And this is where, we believe the opportunity lies. Nuvem9 has been working since its inception in providing small business owners with access to accurate business information in real time. Far too often though, we still see businesses speaking to us who maybe have an accountant that prepares end of year tax returns and accounts, and only that. The client doesn’t get fast and accurate access to their figures, and consequently worry more than they need to about cash and costs. Further, they defer making key decisions on the business that could be made earlier if the information was more easily at hand, and if they had better access to an experienced business advisor, namely Nuvem9.
We believe that Making Tax Digital will bring all businesses into a world that we support and embrace, namely accurate information in real time from wherever you happen to be. Most importantly, it will push businesses off spreadsheets and into cloud accounting systems that bring massive opportunities for improved processes and system integrations. Nuvem9 therefore hugely endorses this initiative and encourages any business wishing to treat Making Tax Digital as an opportunity for growth to speak to us today and leverage our expertise in this area.