Making Tax Digital (MTD) is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs.
HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world. Making Tax Digital is making fundamental changes to the way the tax system works – transforming tax administration so that it is:
- more effective
- more efficient
- easier for taxpayers to get their tax right
The move to digital integration will eliminate many of the existing paper-based processes, reducing errors and allowing organisations to devote more time to running their business. Many businesses use an Accountant and MTD allows them to continue to provide a full service in supporting their clients.
The advantages of digital record-keeping
Businesses, regardless of turnover, can benefit from using software to keep digital records. Software not only helps the effective running of a business but also reduces avoidable errors in business records that can occur when manual calculations are performed, or information is transposed by hand.
By keeping up to date digital records in real time, businesses can also reduce the risk of errors due to lost or incorrectly recorded invoices.
Going digital makes managing business finances more straightforward. Millions are already banking, paying bills and interacting online — going digital with business records and taxes is the next step, giving business more control and better capability to forward plan with their finances.
MTD makes it easier to get things right, digital record keeping will reduce the risk of unwelcome and costly HMRC compliance interventions and help businesses to manage their cash flow more effectively.
Keeping business records digitally means that it’s easier for a business to share their records with their accountant, saving both time and costs, and allowing accountants to focus on more value-added activity.
Source: HMRC Policy Paper – Overview of Making Tax Digital
