Unless you have been living under a rock, you will have heard about Making Tax Digital by now. From April this year the government has begun live testing of the system and from April 2019 Making Tax Digital will force businesses, which are above the £85,000 VAT registration, threshold to keep all records necessary for VAT purposes online.
So what does Making Tax Digital mean for your business?
Making Tax Digital allows small to medium business owners to keep online records of their income and expenditure for Income Tax purposes and send quarterly updates of this to HMRC via their payment software app.
If you are a business that is currently keeping your records in a cashbook, on a spreadsheet or on non-Making Tax Digital-compliant software then you will need to make changes. As of April 2019 you will need to change your systems and processes because you will no longer be able to log-in to HMRCs website and key in your VAT return figures.
When should I get everything in place for Making Tax Digital?
While many businesses are holding out until the last minute, we would highly recommend that you do not wait for Making Tax Digital to apply legally for your business, but instead voluntarily comply with Making Tax Digital for your VAT so you are ready and prepared for when it does become a legal requirement for your business.
By getting ahead of the Making Tax Digital deadlines you have the time to change your bookkeeping processes and also get to grips with using the new software. If you choose to change to Xero we would be happy to help you move the business across and we can train you and your team so you can get the most from the Xero system.
Changing accounting software can be tricky so to avoid last minute rushes, panics and headaches we would recommend that you give yourself plenty of time to plan for Making Tax Digital, because April 2019 will be here before you know it.
For a free report on what you need to do to comply with Making Tax Digital rules, please click the button below to get a free report.