How to Get Ready for Making Tax Digital
In today’s digital world, businesses getting benefit from digitalization as hundreds of them are already using online solutions. Paying bills online or interacting with customers through online channels or using accounting software can be given an example.
In this case, governments want to make processes easier for taxpayers in various countries. Today we are talking specifically about the UK, and the latest updates for businesses to stay compliant!
What is Making Tax Digital?
Making Tax Digital is required by the UK government for making tax reporting easier for individuals and businesses. According to HM Revenue and Customs (HMRC), MTD stands for making tax administration more useful and easy for taxpayers. Of course, one of the main reason for HMRC is to become one of the most digitally advanced tax administrations in the world.
Important Dates for Making Tax Digital
From 1 April 2019, all UK VAT registered businesses above the £85,000 sales threshold except those that have been deferred is mandated to keep their records digitally. So this is the first launch.
From October 2019, Making Tax Digital mandated for customers that have been deferred. Also, MTD is expected to apply to a range of taxes such as corporation tax, income tax, and these will come into effect at different times.
What Does Making Tax Digital Involve?
You should prepare VAT returns and store your transaction data digitally.
Your VAT returns must have links to digital records.
You should submit all VAT returns digitally via the HMRC system Making Tax Digital API.
You should make your software MTD-compatible.
Does Making Tax Digital Apply to Companies?
As we have mentioned before, all UK VAT registered businesses above the £85,000 sales threshold is mandated to keep their records digitally from 1 April 2019. So, there is no requirement for small businesses. Considering that delivering a modern digital tax system will not only lower the costs for businesses but also reduce the amount of tax lost through avoidable error, it is expected for companies to choose MTD voluntarily.
How to Get Your Business Ready for Making Tax Digital
Getting ready for MTD is essential considering that the launch is approximately three weeks away except those that have been deferred.
In this case, businesses should determine the steps to comply with the new digital record by keeping the same requirements. This process is essential for checking their software whether it is compatible with the MTD platform or not.
Will HMRC Provide Free Software for Making Tax Digital?
HMRC will not be providing any free software for Making Tax Digital. Accordingly, a lot of business & agents are looking for solutions in the labor market. In this case, we offer Sovos Foriba SAP MTD Cockpit to help them stay compliant. It enables you to manage your VAT returns in an efficient and audit-compliant way.
Sovos Foriba SAP MTD Cockpit
It runs within SAP as an end-to-end solution and offers both On-Premise / Private Cloud options. It has data analytic capabilities, and it can be customized easily upon the customer’s needs.
It is a tailor-made product with flexible solutions. Of course, it can be adjusted according to the customer’s design, and it can connect to internal and external data sources.
If you’d like to get in contact with Sovos Foriba SAP MTD Cockpit experts, we are always happy to help your business!