Unless you’ve missed all the emails, videos, blogs and letters that have been circulating from HMRC over the last eight or nine months, you’ll almost certainly have heard about the government’s new Making Tax Digital for Business scheme (for those of you who love an abbreviation, they’re shortening this to MTDfb. Catchy, no?).
This initiative, which has been in development for a while now, is designed to make it much, much easier for businesses to manage their tax affairs. The idea is, instead of calculating their tax liabilities manually, once a year, companies have to submit their takings online and find out exactly how much they owe HMRC at any given time.
MTDfb will make taxation errors a thing of the past – and it will also make it impossible for businesses to dispute how much they owe, because all the data will be right there in black and white.
What does this mean for people like you?
If you’re running a business – or you’re heavily involved with your company’s big decision-makers – you’ll soon need to make sure you’re using third party commercial software to maintain your records and send updates to HMRC on a quarterly basis.
Unfortunately, HMRC have announced that they will not be launching a free platform to help you meet your obligations. So, you’ll need to shop around and find a system that ticks all the boxes, then make sure it’s correctly implemented.
When will MTDfb come into effect?
The powers that be have made life a little easier for us by releasing the scheme in stages.
As of April 2019, all VAT registered businesses with turnovers above the VAT threshold will need to submit their tax information digitally. Companies that earn less than this pre-determined figure and don’t want to opt into the scheme sooner rather than later are off the hook – for now – and will be able to continue using HMRC’s online portal.
And as of April 2020 (at the earliest), the big brains behind MTDfb are intending to make it compulsory for all other businesses – regardless of their size or status – to submit figures for income tax and corporation tax via the new digitalised system. The government are still working on the finer details of this stage, so as soon as we know more about what’s going to be expected of companies and when, we’ll let you know.
Not sure where to turn? We’ve got you covered
HMRC have made it clear that the third party software you use to fulfil your MTDfb obligations needs to give you the option to:
- Store your financial records in a digital format
- Create an accurate VAT return from these records
- Be able to send this information to HMRC
- Receive information from HMRC via the API platform (so that you can receive reminders and notifications from them)
We’re pleased to tell you that all of the Microsoft’s accounting solutions we offer here at NAVExperts (Microsoft Dynamics NAV and Microsoft Dynamics 365 Business Central) now support the above functionality. The features incorporated into NAV and Dynamics 365 Business Central have been designed to automate as much of the tax filing process as possible whilst ensuring that your returns are submitted accurately and on time.
If you’re gearing up for MTDfb and you want to learn more about how the NAVExperts can support you in your quest to become compliant, contact our friendly specialists today!