Posted on: 28 September 2017
The Government are Making Tax Digital
From April 2019, VAT registered businesses will need to keep digital records of their taxes for VAT purposes which means you will need to use software to record all your VAT invoices and receipts.
The reason for the change is to make it easier for individuals and businesses to get their tax right and keep on top of their affairs - meaning the end of the annual tax return for millions.
The latest tax gap figures (2014 to 2015) show that over £3.5 billion of revenue was lost due to avoidable mistakes in VAT returns alone*
Following a recent delay in the government roll out of Making Tax Digital, Richard Andrew of Armstrong Watson - the UK’s largest cloud accounting firm – said: “There are a number of areas which still require further clarification from HMRC. Given that businesses already submit their VAT returns online, it appears that HMRC will require a submission of the underlying transactions along with the VAT return from April 2019. The exact requirements are not clear, but we do know that these businesses will all need to start keeping their records electronically rather than any sort of manual system”
Talking about businesses needing to adapt their technology, Richard goes on to say: “New software systems take time to “bed-in” and businesses should be taking action now to ensure they are ready for these future changes in good time”
Making Tax Digital is an initiative that will mean businesses can control the information they supply online at any time. This not only means that customers can check at any time that their details are up to date but also that customers should not have to wait until the end of the year to know how much tax they should pay.
Richard is convinced that “the future of accounting is in the cloud” but the government has committed that it will not widen the scope of Making Tax Digital for businesses beyond the recording of VAT invoices before the system has been shown to work well and to allow time for digital record keeping becoming more widespread.
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