As of November 1st, businesses can no longer access HMRC’s VAT online portal when it comes to filing monthly and quarterly VAT returns the old way. Having successfully set the ball rolling in the Making Tax Digital (MTD) initiative, with 1.8million businesses utilising the service – everything is about to change.
Preparation is key and business owners must pivot quickly to ensure they are not left behind during this time of transition. With this in mind, how can business owners prepare and what steps should take priority?
Time for digital solutions
Businesses were made aware of the MTD initiative in 2015. Few could have foreseen the pressures currently facing business owners at a time when the clock is ticking to ensure their tax processes are successfully digitalised.
For those businesses who embraced MTD early on, automation has successfully helped business owners save time and improve cashflow. On the other hand, those who are yet to make the switch must realise that it is not too late and to not panic. Selecting the right digital solutions for your business should not be undervalued as the wrong solution could fail to meet the needs of what you are after as well as legal compliance too.
Steps to consider
For business owners who are not sure where to turn in the MTD journey, surrounding yourself with the right people is essential.
Accountants are especially in ‘the know’ when it comes to digital accountancy solutions, and will be best placed to offer advice and guidance if you are unsure about the move to digital.
The penalties for failing to ensure your business is compliant with MTD will come into force from January 2023. Businesses are already experiencing enough financial pressures right now and must act swiftly to avoid any further strains. There remains time to shop around for the right solutions at the moment. It goes without saying that businesses must avoid the solutions which are not considered compliant for the migration to MTD. For clarity, here is a breakdown of solutions which will be compatible with the new changes next year.
For those who have familiarised and equipped themselves with the necessary solutions, the preparation does not stop there. If not already, then business owners should begin creating and storing digital records of their financials. Familiarising yourself and your finance team with these new processes on a monthly basis will hold everyone in good shape for the future. As other finance processes will also go digital in the foreseeable future, why not upskill your staff early on in the journey?
The closure of the portal is not to penalise but rather to ensure businesses take the strides required to ensure they make tax digital for themselves. Leaving the portal open could leave businesses complacent and would not offer the necessary push they need to commit themselves to Making Tax Digital.
Embracing digital for the future
Automating financial processes is a daunting new prospect for many businesses. In particular, SMEs who may feel they do not have the resources to manage. But in reality, automating financials will only level the playing field for SMEs. For years, larger corporations were those who had deep enough pockets to access digital financial solutions. But now, technology advancements have paved the way for affordable solutions to enter the market in time for MTD.
Automation eradicates human error, saves time and improves cashflow. So long as business owners embrace the right solutions for their business, MTD will help steer them through the difficult economic climate we are all experiencing.