The importance of choosing the right MTD software for your business
As the UK Government starts bringing its plans for a digital tax system into place in 2019 with the mandation of Making Tax Digital (MTD) for VAT, it is important to understand the longer-term implications of MTD for your business. Paul Oldridge talks about the future of MTD and how BTCHub can help.
The story so far
MTD is a key part of the government’s plan to make it simple for individuals and businesses to stay on top of their affairs and get their tax right. HMRC say that “Making Tax Digital is making fundamental changes to the way the tax system works” and aims to make tax administration more effective, efficient, and easier for taxpayers. BTCHub is perfect for businesses as it is designed to meet these aims with no disruption to your current bookkeeping methods.
Avoidable mistakes cost the Exchequer over £9 billion a year, so MTD for VAT has been a major step forward for digital tax. Most of the 1.2 million affected businesses should now be signed up for MTD for VAT and will have made their first return under the system. For those still waiting – 54% of participants in a recent YouGov poll – it’s important that they become MTD for VAT ready and are prepared for the next step in MTD.
MTD for VAT
The backbone of MTD for VAT is the introduction of mandatory digital record keeping and digital transfer of that information to HMRC for tax returns. Digital record-keeping can include bookkeeping software or spreadsheets, and bridging software is ideal for businesses who don’t want to overhaul their record-keeping methods. Originally, HMRC were planning to collect each account posting in real-time, but this is no longer the case and HMRC currently only require the nine-box totals that make up your business’s VAT return.
For businesses which collect their VAT return data on a spreadsheet, BTCSoftware’s solution BTCHub is ideal as the data is still kept in the same way and simply transmitted via an API to HMRC so that it is compliant with MTD rules. BTCHub also integrates with major bookkeeping packages, making it a versatile tool which can grow with your business.
What’s next for MTD?
HMRC have been working on a pilot with businesses to test and develop MTD for Income Tax. The plan for MTD for Income Tax is for self-employed businesses to use software to keep digital records and send digital Income Tax updates to HMRC, rather than filing a Self Assessment tax return. With this system, a business will be able to see an estimate of how much tax may be owed as their tax year progresses instead of waiting until the end of the tax year.
Having listened to concerns from businesses about the pace of the change to MTD, HMRC have confirmed that mandation of MTD for taxes other than VAT will not happen until at least April 2020. For businesses concerned about the cost of the changes and buying specialist software for each iteration of MTD, bridging software like BTCHub is an ideal solution that works with the current VAT rules and future MTD mandation.
BTCHub means that you are able to maintain your current bookkeeping software or digital method and be ready for both the present and future of MTD. You keep your own digital records – for many small businesses this is a spreadsheet – and BTCHub allows MTD-compliant transmission of your data to HMRC in a few simple steps.
Talk to us
BTCSoftware’s MTD for VAT Solution BTCHub can be purchased as a standalone product for £250 +VAT for a 12-month licence. It’s quick and easy to set up and unlimited support from our support team is included. To speak to the sales team about BTCHub, please call 0345 241 5030 (option 1) or email email@example.com