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Making Tax Digital

Why is it so important?

The provision of timely and accurate financial information is essential to be legally compliant and a vital tool to assist management in making the right decisions for the business.

Looking at your bank balance can be deceptive, as it does not represent a true picture of your profitability, liabilities and taxes. Cash flow is integral to your business, but without accurate records you cannot get an accurate financial position, which could lead to poor decision making.

Why will it have to become digital?

The digital revolution is upon us, millions of individuals and businesses benefit from digital interaction with the likes of HMRC, suppliers, customers and their bankers.

HMRC are introducing a series of steps towards a complete digitalised tax regime, known as Making Tax Digital (MTD). Initially commencing in April 2019, all VAT registered businesses must submit their VAT returns electronically directly from their ‘MTD compliant’ accounting software.

Whilst it is unclear exactly when all other taxes will begin to fall under the MTD quarterly reporting regime (HMRC state that it will not be before April 2020) this process towards full digitalisation appears inevitable.

In light of these requirements, bookkeeping software will not only need to be MTD compliant, but will also need to have accurate financial information in ‘real-time’.