Making Tax Digital doesn’t have to be taxing – that’s according to a Northern Ireland accountancy firm
As a radical overhaul of the UK tax system approaches, Belfast-based cloud accountancy specialist Exchange Accountants is calling on Northern Ireland businesses to ‘get on the cloud.’
Making Tax Digital (MTD) is a new method of tax collection and administration from HMRC which will come into effect in April next year, and will require businesses who have turnovers above the VAT threshold of £85,000 to file tax returns digitally every quarter.
Exchange Accountants are advising that to be ready for this new digital tax age by next Spring, VAT registered businesses should be making the necessary preparations sooner rather than later.
Every affected business and individual will have their own Digital Tax Account through which reporting of income and expenses will be required on a quarterly basis. Affected taxpayers will also need to digitally provide a finalised end of year position to HMRC as part of a year-end activity report.
Gary Laverty, Accounts Director at Exchange Accountants, the first accountancy practice in Northern Ireland to be recognised as a Gold Partner for leading cloud accountancy software provider Xero, said Making Tax Digital is the most significant change to the UK tax system in a generation.
“We know that going forward, businesses and individuals will have to obtain some form of digital software for record keeping so we are calling on all those affected to start preparing for the move now before they’re left behind,” said Mr Laverty.
Tax payers will be required to start using the new digital service from:
– April 2019 if their turnovers are more than the VAT threshold (currently £85,000)
– 2020* if they are within the scope of corporation tax and are above the VAT threshold
– 2020* if they have profits chargeable to income tax and are above the VAT threshold
– 2021* if they have profits chargeable to income tax and are below the VAT threshold
HMRC has stated that MTD will reduce the administrative burden for businesses and increase the tax payable to the exchequer by reducing the number of errors – an important step in closing an estimated £35 billion tax gap.
However, with many businesses and individuals still relying on spreadsheets and battered shoeboxes full of receipts to complete their accounts, there is now a real need for those affected from April 2019 to start exploring their options for reporting their VAT digitally online.
The move towards digital accounting is a positive one, according to Gary Laverty, an early adopter of digital accounting.
“The need to embrace digital accounting that’s been necessitated by Making Tax Digital will ultimately be a positive for most businesses,” said Gary.
“As the first Xero Gold Partner in Northern Ireland, we’ve been using the cloud to work collaboratively with a large percentage of our client base for some time now, and although these changes will surely be seen as unneeded stress for some, the reality is that cloud accounting will actually remove the need for a lot of that stress,” he said.
“If anyone has any concerns on how Making Tax Digital will impact on their business, or would like more information or advice on switching to cloud accounting, at Exchange we’re more than happy to have a ‘no obligation’ chat about their requirements,” he added.
Exchange Accountants will be hosting seminars on how to prepare for Making Tax Digital. Anyone interested should call 028 9040 7470 or email info@exchangeaccountants.com.
