What is Making Tax Digital?
You may be aware of HMRC’s initiative called ‘Making Tax Digital’ which aims to simplify the way individuals and businesses manage their financial reporting by submitting the information online. The software works in conjunction with bookkeeping software such as Xero, SAGE and Kash Flow.
The benefits of keeping all tax related information online are varied:
1. Better use of information – by being able to access all the information, both the HMRC and the taxpayer can ensure that all information is up to date and correct
2. Tax in real time – as a customer you will know how much tax you need to pay as close to real time as possible, rather than just once a year
3. Single financial account – by having one digital account you will be able to see all of your financial information in one place, therefore providing a clearer picture of your finance
4. Digital interaction – the HMRC will provide advice and support and can be contacted via a secure messaging system
After widespread concerns about the timescales that HMRC had suggested, they have introduced a staggered implementation schedule. By 2019 all VAT registered businesses will need to be compliant, and timescales for smaller businesses are yet to be confirmed. The idea is that the VAT return data will flow directly from the accounting software into the HMRC system when the VAT return is submitted.
What does it mean to me as a Network Marketer?
It depends on the size of your business and your turnover. If your business has a turnover of more than £85,000 it needs to be registered for VAT, and you will need to sign up to Making Tax Digital by April 2019. If you have a small business under the VAT registration threshold, HMRC have not confirmed a date yet, but are envisaging from April 2020 at the earliest. It’s worth noting that HMRC have said that businesses with a turnover of less than £10,000 per annum will be exempt from the new regime and this will cover many Network Marketing businesses.
With MTD on the horizon, we have worked closely with a software developer and are pleased to announce the arrival of our PRBookkeeping software which is the only bespoke piece of accounting software on the market for Network Marketers. With MTD gradually being rolled out to the majority of businesses during the next few years, it makes sense for businesses to start using accounting software if they are not already doing so.
If you would like to discuss how MTD is likely to affect your business, please give us a call on 01444 458252 or email firstname.lastname@example.org.