With just under three months to go until the MTD deadline for those businesses who are VAT registered above the £85,000 threshold, businesses should be well on their way with adjusting and integrating new digital tax systems to make the transition as smooth as possible. Here’s a timeline of what needs to be done before then.
The main date you should be aware of is 1st April 2019. This is the day the big switch is happening for VAT-registered companies earning over £85,000. This date doesn’t concern those who aren’t at this stage yet, but you can voluntarily opt in if you’d like to take the plunge earlier.
HMRC are rolling this out in 2019 to these specific companies as a pilot scheme. This first phase is the perfect opportunity to do extensive testing on whether a digital taxation process works well or not. It gives HMRC plenty of time to iron out any potential problems with the system before it’s introduced to every business and individual cases too.
The government are also introducing a 12-month soft-landing period, by which their new point-based late submission penalties are delayed by 12 months.
However, this doesn’t mean that all penalties are delayed until then, as you can still be sanctioned for not keeping digital records in compliance with the new system from this date. Fines can reach a maximum of £3000.
If everything goes to plan and runs smoothly with the initial pilot scheme, the earliest date that the new process will be rolled out to other businesses is 1st April 2020. This year delay gives HMRC time to gain some helpful user feedback and will allow them to improve the process if needs be. It will also give smaller companies substantial time to prepare for the ground-breaking switchover.
As mentioned above, the 12-month soft-landing period on point-based penalties for late submissions finishes on this date. This means that after this date, you need to be super organised and well on the ball to avoid any unnecessary, avoidable fines and sanctions.
You can’t pin a specific date on this one as it differs from business to business depending on when you start your new financial year. So, whenever it falls within your business, now is finally the time you’re going to get on top of your finances and be in the most control you’ve ever been of your budget.
The start of your financial year is when you lay down the foundations of the year ahead. Get off to a poor start and you can expect more of the same for the rest of the year, frankly. With the digital recording and taxation process, you can become more organised and that will hopefully trickle down through your business and make you a slicker, more efficient company.
The best way in which you can get this organisation off to a flying start is by investing in a smart top-quality bookkeeping platform. As you’re going to be working with new legislation that you’re likely to be unfamiliar with, the platform can help you stay on top of everything and prevent any unnecessary errors from occurring.
This will be your first quarterly update in which you have to declare your taxes and financial statements to HMRC. Currently, a lot of businesses are only updating HMRC annually, which can be particularly stressful and a lot to record in one declaration.
By introducing a more frequent update, HMRC is lifting the pressure of you to include everything at the end of the year. This way, you’re not stressing and desperately trying to find every last transaction from the year behind you.
A lot of businesses already operate in this way, but there are still plenty that don’t. If you don’t, you’ll need to change the way you do your books. This sounds daunting, but it’s really nothing to worry about. We understand not everybody likes change, but this change is for the better. It'll allow you to fully take control of your finances and keep on top of your bookkeeping.
This will be the second quarterly update of the year. It’s the same as the first one so hopefully, you’ve got a set process in place for how you’re going to carry these out. As it’s now six months before the end of the financial year, you can start thinking about how you can plan for that - so you’re not doing it all at the last minute.
Plus, you can now forecast how your end of year is going to look with relative accuracy.
This will be your final quarterly update of the year. By now you’ll have done two of these, so the procedure you have in place should run like clockwork. This will give you a good indicator of what targets you have to hit to reach your goals and ambitions for the end of the year.
This is the big one. However, as you’ve been keeping digital records, it’s going to be nowhere near as stressful as what it has been in previous years.
In this final submission, you need to declare everything you’ve earned in the year. This is made much easier as you have the quarterly review to consult so you’re not rummaging around looking for every last receipt. Make sure you include everything so that you’re taxed correctly.
Find Out More About Making Tax Digital
So, you now have all the crucial date that you need for your diary. But, are you clued up on the ins and outs of why you’re going digital and the legislation behind it? Or, the massive benefits it can have for your business? We advise that it’s best to go into this transformation with a wealth of knowledge so you can give your business a clear direction.
Well, lucky for you, we’ve put together a packed summary sheet full of everything you need to know to go into the big switch will full confidence. Download it below for free today.