How Does Digitalising Tax Improve Your Business?
Since 1st April, Making Tax Digital (MTD) has been mandatory for VAT-registered businesses in the UK.
Making Tax Digital (MTD) for VAT is an initiative designed by HMRC to digitalise the tax regime and simplify how companies and individuals manage their tax affairs – from saving businesses time in processing to removing avoidable mistakes that are resulting in tax revenue being lost.
The first phase of the initiative was introduced on 1st April 2019, which meant that businesses with a taxable turnover above £85,000 were required to follow Making Tax Digital (MTD). This involved:
- Signing up for Making Tax Digital (MTD)
- Using compatible software – both free options and more advanced software is available
Since the initiative was announced, many businesses have signed up, which includes 11 million successfully submitted returns.
However, as all VAT-registered businesses are now required to digitalise their tax undertakings, our specialists wanted to outline the benefits of digitalising for your business.
How can digitalising tax affairs improve my business?
According to Lucy Frazer, HM Treasury’s Financial Secretary to the Treasury: “Businesses using MTD are saving time on their tax affairs, streamlining their processes and boosting their productivity as a result. Our first move towards a modern, digital tax service – MTD makes it easier for businesses to get their tax right the first time.” Here’s how:
- Streamlining the process
Making Tax Digital (MTD) streamlines the tax returns process, as MTD-compliant software allows businesses to monitor incomings and outgoings easily, online, rather than sorting through all your receipts, invoices and documents.
MTD-compliant software also simplifies your bookkeeping, as well as allows for other digital tools such as data analysis, helping to shorten the time needed for accounting and reducing its inconvenience.
- Minimising mistakes
Filling your tax returns can be time-consuming and if submitted after the deadline, there is even the risk of being fined. Also, once submitted, they may contain costly mistakes.
An estimated £3.5 billion is lost through these mistakes. However, by digitalising your tax returns these avoidable mistakes are removed.
- More time to focus on your business
Streamlining your tax returns process and minimising mistakes (as well as reducing the time taken to correct these) can help increase productivity. With more free time on your hands, you can spend more time focusing on business outcomes.
How can Edwards Accountants help?
Our experienced chartered accountants in Walsall, with the support of our West Midlands auditors, are highly qualified to advise your business with its tax affairs. Contact us to speak to one of our specialists.
For our West Midlands Offices:
Tel: 01922 743 100
For our East Midlands Offices:
Tel: 01509 357 707