The ongoing debate on MTD and whether or not it would be implemented from 1st April 2019 is something that has sent jitters to the business world. Some businesses, especially start-ups, have been caught off guard and feel it is an expensive investment. Big names have already taken the bold step and some are even at the piloting stage to ensure that all is set for April. Making Tax Digital’s time has come and there is no way it can be stopped.
The most important thing that businesses should be thinking about is how to ensure that they are ready due to the inevitability of MTD.
It reduces errors/Omissions in filing tax
When the submission of tax returns is made manually or using other unauthorized forms, errors and omissions are basically unavoidable in the long term. Imagine having to put together all those records on paper, manually; the invoices, the receipts and all books of accounts. You cannot be perfect and therefore so many errors can, and probably will occur. These lead to tax leakages. With Moving Tax Digital, you expect minimal errors since data is captured real-time and therefore, the government expects to increase efficiency in its tax collection through this system beginning April 1, 2019.
It is easier for the HMRC to monitor businesses
With other systems, the regulating body relies entirely on manual returns and therefore there has to be enough workforce; accountants, editors and such to compile data for all businesses and ensure that everything is in order. This takes a lot of time and you there is no guarantee of accuracy. With MTD, business transactions will be recorded in the HMRC approved system on a daily basis and therefore, returns would be done on a monthly, quarterly or any time it deems fit. It is just a matter of logging in to the system and pull data for a particular business of interest.
MTD is a cost-effective way of doing Tax returns
You can imagine the number of government accountants, auditors and other professionals that are employed to ensure that tax returns are done efficiently. The number runs into tens of thousands if not millions. This is because of the workload involved in compiling manual files. With a MTD for VAT system, all business will be filling their tax returns into the system-real time and thus, a minimal workforce will be needed to oversee compliance. This will be a saving for the government; the rest of the workforce can be redeployed in other sectors where they will be productive.
All government systems are already aligned for MTD rollout
You may want to play the waiting game and “dilly-dally” on compliance with the new system but one of the things you can be sure of is that all government tax systems are already set for the new system. There is no way the HMRC can go back to the old system since a lot of money has been spent on procuring the necessary software, ready for a roll-out. Therefore, if your business has a turnover of over £85,000, then you must get the MTD compliant system running to avoid the costly “rush hour.”
One of the things you can be sure about Making Tax Digital is that there is no turning back for the government. All systems are set and April 1 is the date for the roll-out. Times are changing and you’d better get with it.