HMRC is going online...
...get ready for the robot tax man
It’s billed as the future of tax, designed to make filing and paying up simpler, faster and more convenient. When everything’s in place, Making Tax Digital will mean that both individuals and businesses will need to get their electronic ducks in a row, using specialised software to report to the taxman. While HMRC is talking up the convenience factor, they’ve still got at least one eye on the £9 billion they believe taxpayer mistakes are costing them each year. Here’s a run-down of what you need to know right now:
HMRC’s planning to become one of the most high-tech tax administrations in the world. For self-employed people and businesses, that means the old Self Assessment system is going to shift from yearly to quarterly filings. Under MTD, you’ll need to keep your business records digitally, and send updates to HMRC directly from your software. It’s not all bad news, though. At any point, you should be able to get an overview of your tax situation, and get an estimate of what you’re likely to owe at the end of the tax year. You can actually send your updates more often, or even pay your tax bill as you go if that’s easier for you.
Making Tax Digital for VAT was the first major leap HMRC took in its new scheme. Most businesses registered for VAT with a turnover of £85,000 or more now have to use MTD-compatible software for their VAT returns from the 1st of April 2019. MTD for Income Tax and Corporation Tax were announced to come into force at some point on or after April 2020.
Once Making Tax Digital’s in full swing, you’ll need to be prepared to talk to the robot taxman. Those quarterly reports are just the start of things. Along with the year-end statement and final confirmation, you can expect to be chatting digitally with HMRC 6 times a year or more. You’ll need to learn to live without your familiar old paper records, if you’re still clinging to those. The software you use will depend on your needs, but it’ll have to be able to:
If you’ve got RIFT Accounting on your team, then Making Tax Digital won’t cause you any sleepless nights. We’ll guide you through every step of the transition to keep it smooth and simple. Of course, you’ll still get the same great, year-round service you always do from RIFT.
Once you're with RIFT Accounting, you'll be completely covered. You’re not going to get wrong-footed or caught out by the new system. In fact, you’re barely going to notice the change at all. We’re already using the right kinds of software, we were part of the HMRC pilot, and our experts are fully on the ball.
With any new tax system or rules, you might find yourself needing some extra advice or guidance. We’ll walk you through exactly what Making Tax Digital means for your business, and make sure you’re properly set up to handle it. If there are any potential bumps in the road on your information’s digital journey to HMRC, we’ll smooth them out for you. At the same time, we’ll be making sure you never pay more tax than you owe, and constantly scanning the way ahead for obstacles and opportunities.
If you don’t already have RIFT on your team, then now’s a fantastic time to get started. We can get you up and running fast with a custom-built service and MTD compliant cloud accounting software. With no hidden costs, you’ll always know where you stand and never find yourself on the wrong side of HMRC. We’re the perfect watchdog, guide dog and guard dog for your business – so when the taxman changes the rules of the game, you’re better off with RIFT.
As your official Agents with HMRC, we’ll keep on tacking the taxman on your behalf to protect you and your business. Remember, you can always come to us with your questions and problems, so get in touch whenever you need us.