Delay in latest MTD phase gives breathing space

There is an old saying, apparently coined by Benjamin Franklin, a founding father of the USA and prolific inventor, which says: “Don’t put off until tomorrow what you can do today.” The meaning being obvious. There is another single Spanish word, mañana, which pretty much means the opposite. Or leave it until we are ready.

For those facing the headache of implementing new digital tax rules, either could apply as a result of the Government’s decision to delay the next phase of Making Tax Digital (MTD) for a year.

It could be that firms see it as a blessed relief as we adjust to life after lockdown. To others it might be the case of cracking on, taking advantage of the delay, and being ready in good time. Accountants need to be able to advise their clients on the best course of action here.

Acknowledging the challenges faced by many UK businesses during the pandemic, the Government will now launch MTD for Income tax Self-Assessment (ITSA) in the tax year beginning April 2024, rather than 2023.

The self-employed and landlords with a business income over £10,000 per annum will now need to follow the MTD rules from 6 April 2024.

Making Tax Digital, as the name implies, is about looking towards paperless accounting. This in turn will require specialist software to make it easier for individuals and businesses to get their tax right and keep on top of their businesses.

Outsourcing is a key area to be explored here, so you need to ask yourself:

  • What do I really need to do?
  • Who can help?
  • How outsourcing can help?

GI Outsourcing can guide and support accountants through the changes with its specialist teams, command of the latest web-based accountancy solutions and help in setting up and maintaining your systems.

What does the new software need to do?

  • It must be able to keep records in a digital form.
  • Preserve digital records in a digital form.
  • Create a VAT or tax return from the digital records held in functional compatible software and provide HMRC with this information digitally.
  • Provide HMRC with VAT and tax data on a voluntary basis.
  • Receive information from HMRC via the API platform that the business has complied.

You will need to review you and your clients’ current record-keeping systems and to reconsider what work you decide to do yourself and which activities you wish to include in the service provided.

What does this mean and where do you start?

It will become mandatory for almost all businesses and organisations (self-employed, partnerships; limited companies and others) to use software to keep accounting records. Paper accounting records will cease to meet the requirements of tax law.

Action plan for outsourcing partners should include:

  • Discussing the current status of your VAT clients.
  • Evaluating the software you use and compliance.
  • Understanding what needs to be done and if data conversion is needed.
  • Registering your business through your software for MTD service activation.

 

Take a breather before the next stage or crack on immediately? The choice is yours and we are here to help.

Contact our UK-based team of account managers today to find out how we can help your firm.

Share here
Posted in Blogs, For Accountancy Practices, For Small Practices.