What does Making Tax Digital (MTD) mean for accountants?

Tags:
0
0

In what ways is MTD changing the way accountants work? What challenges and what opportunities does it create for accounting practices?

Marked as spam
Posted by al-fn (Questions: 36, Answers: 44)
Asked on 6 June 2020 11:26 am
14 views
0
Private answer

MTD will affect everyone who pays tax, from Companies to self-employed individuals and landlords. It is a complete digitisation of the tax system and it requires that:

  • bookkeeping is done electronically
  • on a quarterly basis income and expenses are reported digitally to HMRC
  • tax payments are done quarterly to HMRC

Businesses and landlords who join MTD must keep their business records digitally and send tax information to HMRC directly from those records.

HMRC is replacing tax returns with digital tax accounts for millions of businesses and individuals. A digital tax account brings together each taxpayer’s details in one place, just like an online bank account. Taxpayers will be able to view their tax affairs in real time, update their information, register for new services, see at-a-glance how their tax is calculated, and choose payment options.

 VAT

From 1 April 2019, all VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) must keep their VAT business records digitally and send their VAT returns using MTD-compatible software.

The deadlines for sending VAT returns and making payments have not changed.

 

Income tax

Businesses and landlords who join MTD for Income Tax will need to send quarterly summaries of their income and expenses to HMRC using MTD-compatible software.

The deadline for making Income Tax payments is not changing.

 

Record Keeping

HMRC wants to know that businesses use one of their approved softwares for VAT calculations. The business record keeping part remains unaffected. The following link lists all the approved softwares by HMRC:

https://www.gov.uk/government/collections/commercial-software-developers

The amount of information required is still the same, just required to be kept and presented digitally.

It will no longer be legal to simply enter the monthly total of all invoices into the digital software, individual invoice details must be entered into the software. Therefore it will be more efficient to simply issue the invoice directly from your software.

 

Agents

Agents will need to create a new Agent Services Account. Existing agent-client relationships can be copied over. Then sign up clients individually.

 Accountants should encourage clients to ensure whatever they use digitally links to their own practice software to be able to access their VAT records—and also able to advise them if they are not keeping the correct VAT records. This is likely to present challenges for the clients as well as the accounting practices.

 However over the long term going digital should make managing business finances more straightforward, saving both time and costs. Overall it is anticipated to make the whole tax experience better for both the businesses and HMRC.

Marked as spam
Posted by al-fn (Questions: 36, Answers: 44)
Answered on 6 June 2020 11:26 am
Votes
Answers
Views
Question
0
votes
1
answer
14
views
asked 1 month ago by al-fn
Tags:
0
votes
1
answer
4
views
asked 1 month ago by al-fn