Corporate Tax » Is your business ready for digital tax reporting?

Finance directors and CFOs face a big responsibility coming into 2019. That’s because they need to ensure their business is fully prepared for the major and imminent changes to tax reporting.

It’s now just a couple of months until the April deadline for Making Tax Digital – the biggest change to affect accounting for decades.

With such a monumental transformation just around the corner, it would be unsurprising if some directors were feeling a little trepidatious.

That’s why IRIS has created a special, easy to follow guide for businesses on MTD.

What is MTD really all about?

As our guide explains, HMRC aims to make the tax system in the UK the most advanced in the world. It’s making fundamental changes to the way that the current system works, to make it easier for those submitting their tax records, as well as those administering and governing it.

HMRC believes that with millions of businesses already banking, paying bills and interacting with customers or suppliers online, digital is the direction that the world is and it needs to keep up with this. For many, after all, this is how we expect to work and interact.

Breaking down MTD

The actual change required for businesses to comply with MTD is that they must maintain digital records and they must submit data to HMRC via new MTD APIs, so businesses need to ensure that they (or their agent) are using MTD compatible software.

When does it begin?

Despite delays, debates, and arguments, about whether there is a need to push back the implementation date, HMRC has confirmed that MTD for business will become mandatory, beginning with MTD for VAT from 1 April 2019.

Who is affected on 1 April 2019?

All UK businesses that are VAT registered and above the £85,000 VAT threshold will be required to keep their records digitally and submit VAT returns to HMRC using MTD-compatible software for the first VAT period starting on or after 1 April 2019. Other areas of MTD, such as Income tax and Corporation tax, have been put on hold until 2020 at the earliest.

What do digital links mean?

A VAT notice from HMRC published on 13 July 2018 states that, whilst the complete set of digital records to meet MTD requirements do not all have to be held in one place or program, there must be a digital link between the pieces of software used. This is now enforced by law. You need to ensure that your business is ready to comply.

What help does the guide offer?

The guide takes you through all the essentials of MTD that will ensure directors will be feeling prepared and confident in taking the next vital steps. Among the important features contained within, it also covers:

  • What you need to do next
  • The first steps to understanding if your software does what’s required
  • What to ask your accountant
  • Where to find out more
  • What video resources are available

The guide provides a lot of help for financial directors and businesses that will set you on the right path to MTD compliance. And if you’re looking for proven bridging software to work with your existing accounting system, please get in touch. IRIS VAT Filer is available today and will work with many ERP systems, including Oracle and SAP.