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Making Tax Digital Information Sessions

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Positive Accountants

York Road

York

YO26 8DH

United Kingdom

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It’s Time… Making Tax Digital

Her Majesty’s Revenue & Customs (HMRC) is beginning the move away from the annual filing of tax. Over the next few years businesses in the UK will begin the swap from yearly to quarterly submission of tax information, that’s income, payroll and expenses, every three months. And, to do this we’re all going DIGITAL.

Getting everything together in one place is, in reality, going to make accounting more transparent and save time. You’ll be required to check your data and submit it every three months and provide any additional information that HMRC requires.

The Timetable

HMRC is introducing Making Tax Digital (MTD) in stages to allow us all time to prepare…

  • From April 2019, businesses with a turnover above the VAT threshold will have to keep digital records for VAT purposes.

  • From 2020, businesses may be asked to keep digital records and update HMRC quarterly for other taxes.

Taking Advantage of Digital

Removing the worry, and often frantic efforts that accompany annual tax returns, MTD will spread out the activity AND bring plenty of other benefits for you and your business, take a look!

  • Banish the end of year scramble
    Submitting information every three months, means no more frantic activity just before the end of your financial year.

  • Big reduction of paperwork
    Over the last few years computer accounting software has delivered some great, easy to use programmes, including Quickbooks, that can automatically record money coming into and going out of your business. Easy to update and monitor, you (or your tax advisor) checks the data and submits it to HMRC each quarter.

  • Fewer nasty surprises
    Because tax will be calculated quarterly, you will know, within every three months, how much tax you owe and there’s far less chance of a nasty surprise.

  • Knowledge is power Seeing the ebb and flow of your finances in greater detail will assist your strategic planning and help with making day-to-day cash flow decisions.

  • The opportunity to lower your tax bill
    Again, more granular knowledge of your income and expenditure means you can make strategic decisions to lower your tax bill, such as reinvesting in the business.

… and finally,

Everything Connectswhich means less paperwork piling up

Digital data about your business will go directly to HMRC from banks, building societies, and other government departments. This means that you won’t need to manually process this information for them - you’ll actually have far less work to do.

What Are the Downsides to Making Tax Digital?

The new regime means that there is more transparency for your tax; however, there are changes to manage and understand. Here are some things to consider:

  • Compulsory use of technology
    Yes, everyone is going to have to get online. Making Tax Digital is just that and there’s no way around it. HMRC requires you (or your tax advisor) to submit returns online, through either an HMRC app or online accounting software.

  • More reporting deadlines throughout the year
    After MTD takes effect, Income tax and corporation tax will join VAT returns by being submitted quarterly. This means the single annual filing for income tax and corporation tax will be supplemented by four quarterly reports.

  • Loss of privacy
    HMRC will be able to see some of your digital data and transactions. You will, however, be able to review your data and correct any mistakes before it’s submitted to them.

Do I have to get computer software?

No, you are not required to get accounting software but HMRC strongly encourages it. It’s a very useful way to support organising your finances.

Accounting software like QuickBooks, Xero or SAGE is designed to be straight forward to use, plus, it has added advantages, including;

  • Pulling in transaction data straight from your bank, your invoicing software, or your POS system.

  • Updating your transactions every day, allowing you to stay on top of bank reconciliation.

  • You can create digital records of paper receipts by scanning or photographing them with your smart phone

  • Accounting software is tax deductible!

Making Tax Digital Really Does Make Sense… Your Opportunity

Use this as your opportunity to better your business. Through regularly checking your income, expenses and profit you can make better decisions, avoiding pitfalls and planning for the future.

The changeover may appear daunting but spreading the work load more evenly will reduce it in the long run and you’ll be able to react faster to opportunities and threats in the business.

We look forward to seeing you at one of our information sessions.

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Location

Positive Accountants

York Road

York

YO26 8DH

United Kingdom

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