Making Tax Digital (MTD) is a UK government strategy to streamline and digitise the country’s tax system. Businesses in Wales must follow suit and work towards keeping digital records, using appropriate tax software and submitting updates every quarter.
MTD is supposed to make it easier for self-employed individuals and businesses to get their tax right and hopefully make the whole system more efficient. These changes have already come into effect for VAT and will next be required for income tax.
If you aren’t sure where your business stands, here are some things you should be doing to streamline your accounting.
Employee training and compliance
With the transition to digital tax systems, employees need to be trained and be aware of the impacts it will have on business. Compliance is crucial to avoid penalties and fines, so employees must understand and keep up to date with changing tax regulations and processes.
The amount of training required will depend on your internal tax methods and whether you outsource your tax compliance and accounting processes. If you’re keeping it all in-house, comprehensive training will likely be required.
Transition to digital accounting methods
Using digital software that works with MTD is already a requirement for VAT returns, so you need to switch if you haven’t done so already. Overall, it makes sense to transition to digital tax and accounting systems entirely to keep your business processes more consistent and easier to manage.
MTD-compatible software streamlines the tax management and reporting process and can help to ensure increased accuracy and compliance – both of which are essential if you’re looking to run a successful business.
Organise and maintain digital records
Forget collecting, accumulating and managing the paper trail, with digital tax systems you can do it all online and back up to the cloud to ensure you lose nothing. This takes many of the headaches around tax return deadlines away and makes your life as a business owner or in-house accountant easier.
Security is important in today’s cyber world and even more so when such sensitive information needs to be kept online. Ensure your company’s cybersecurity protocols and measures are watertight to reduce the chances of a data breach.
Seek professional assistance
Everything regarding VAT, tax and reporting can be confusing at the best of times, even more so when entire systems are in the process of switching.
If you or your company needs support, it’s recommended you seek professional advice to ensure no mistakes are made. Whether you outsource your tax processes or keep them in-house, an expert adviser can be worth their weight in gold.
