Making ‘MTD’ sound sexy!
I am going to apologise in advance for this blog. I consider myself to be a far cry from the comedic stereotype of an accountant – a grey suit and large audit briefcase – but even I can’t make Making Tax Digital sound sexy.
Making ‘MTD’ sound sexy!

I am going to apologise in advance for this blog. I consider myself to be a far cry from the comedic stereotype of an accountant – a grey suit and large audit briefcase – but even I can’t make Making Tax Digital sound sexy.

Even as I’m writing it down in this blog, I’m compelled to click away and look at something else on the internet…still it’s better than “VAT Notice 700/22”!

Hopefully you’re still reading.

What is Making Tax Digital?

HMRC describe this as a way of making it “easier for individuals and businesses to get their tax right and keep on top of their tax affairs”.

And in some ways they are right.

Back in 2015, they digitised the personal tax account and since then we’ve seen payroll and other tax filings get simplified with digital submissions to HMRC. And fundamentally this has made these regular tasks far easier.

This stage of Making Tax Digital for VAT (MTDfV) is the next step, first implemented in 2019, to get the digitisation treatment.

Deadlines

MTDfV (doesn’t make it sound any better…possibly makes it sound worse) was started back in 2019, with all VAT registered business over the VAT threshold of £85,000 required to keep digital records and submit VAT returns to HMRC digitally.

Since then many have opted for implementing Xero and other cloud-based accounting software to satisfy the regulations.

Efficient and Simplified

Those businesses who have taken this the leap to the “cloud” and got the implementation right, will hopefully have seen how easy systems like Xero make record keeping and how integrating systems can have huge advantages in getting real-time information on how their business is performing.

From 1 April 2022, all VAT registered businesses regardless of turnover, will also need to comply and they too can tap into the benefits that cloud finance brings.

Too good to be true?

Not only is there the necessity to implement a digital software to take care of the accounting and submissions, but in a period where a lot of businesses have moved other functions to digital cloud-based systems, many could get caught out by the “digital links” guidance.

As of the 1 April 2021 those businesses may not be aware that if they sell items online in a “store”, they have a retail till system in front of house, or even create invoices in MS Word, these digital systems need to be linked to their accounting software digitally.

Whilst a lot of providers have a native integration with some accounting platforms, there are many that do not and although other ways of digitally linking software include emailing records, linking cells in spreadsheets and downloading and uploading files, these might not be suitable in their current form to satisfy the regulations. The expertise or add-ons to integrate systems can also add to the cost of the implementation.

The Future is bright

As someone who over their career has started with handwritten cashbooks and produced sets of accounts on a typewriter (I kid you not!) to get to a point where I can provide a small business owner with real-time management information on their performance and cashflow, I firmly believe that the time and cost taken to implement the right automations and systems, makes businesses better.

If you want to have a chat about how we can help, or simply to tell me I don’t look old enough to have typed sets of accounts on anything other than a computer, please get in touch on the link below.

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