So what does this mean for businesses? Well, it means that from April 2022, all businesses will need to use software to keep their records and submit their tax returns digitally. This might sound like a big change, but in reality, it just means keeping your records in a digital format and submitting your tax returns online, rather than through the traditional paper-based system or via the Government Gateway.
The good news is that Tradermate are ready to help you. We use Xero, an award winning bookkeeping software, to manage your books and file your returns, digitally.
So what are the benefits of Making Tax Digital? The government says that it will make it easier for businesses to get their tax right and save them time and money in the long run. In addition, it will make it easier for HMRC to detect and correct errors and collect the correct amount of tax.
So if you’re running a business, it’s important to start thinking about how you’re going to make the transition to Making Tax Digital. And if you’re not already using digital records, now is the time to start!
Does this affect me?
Every VAT registered business (whether under the threshold or not) must register for MTD from April 2022. That includes limited companies, partnerships, charitable trusts, and landlords with at least one UK property.
If you’re not VAT registered, there’s no need to worry about MTD just yet. However, you will need to sign up for MTD for Income Tax Self Assessment (ITSA) by April 2024. In the meantime, focus on running your business and ensuring that your finances are in order.
What are the benefits of Making Tax Digital for your business?
When you are running a business, there are always a million things to do, and it can be difficult to keep on top of everything. Making Tax Digital can help take some of the pressure off by automating manual processes and making it easier to keep track of your finances. This can give you more time to focus on other aspects of your business and can help you to avoid costly mistakes.
Making Tax Digital can also help you to become more efficient and organised in your record keeping. This can save you time and money in the long run, as you will be able to access your records more easily and be less likely to lose important documents.
Overall, Making Tax Digital can save you time, money, and stress. It can help you to become more efficient and organised and can free up your time to focus on other aspects of your business. It may take a little bit of work to start with, in setting up your books online, but that’s what we can help you with at Tradermate.
What happens if I don’t comply with MTD?
You could face a penalty. Making Tax Digital penalties are changing from January 2023. HMRC is moving to a points-based system so that penalties are only given to those who regularly make mistakes and miss deadlines. This means taxpayers who make the occasional error will not be penalised.
However, taxpayers who consistently fail to meet their obligations under MTD may be subject to penalties. The new points-based system will mean that penalties will be given for each failure, with the amount of the penalty depending on the severity of the offence.
So, if you’re thinking of not complying with MTD, be aware that you could face a penalty. The best way to avoid a penalty is to make sure you meet your obligations under MTD. Not sure how? Get in touch.
Call us, if you have queries or you’d like to talk about how we can help you. 03309 121828