FinanceHaines Watts

Making Tax Digital: are you ready?


FinanceHaines Watts

Making Tax Digital: are you ready?

Plan ahead as digital tax reporting is coming and you need to be prepared

Making Tax Digital: are you ready?

KFC ran out of chicken. The fast food outlet had a big pile of fresh chicken in its central warehouse, and an army of cooks ready to prepare it for hungry customers in hundreds of restaurants. But a change in logistics firm meant the chicken never crossed the road, as it were.

And I fear some small business owners are underestimating the impact that the Making Tax Digital (MTD) programme may have on their operations, when they become obligated to comply.

Time for a tax change

As we head towards April, tax is on every business owner’s mind. But, while some have embraced the opportunities offered by the Government’s new online tax programme, there is still a small group which is resistant to change.

Yes, MTD has been delayed a little, but you can’t postpone the future indefinitely, especially now HMRC is upping the ante in an effort to get all VAT-registered businesses submitting their VAT returns electronically from 2019 – and reduce the number of entities which are avoiding paying their dues.

But I don’t want to talk about the fine print around MTD. Instead, I want to return to what is a favourite topic of mine in these blogs – the importance of business planning in managing long-term risks.

Make digital a priority

Changes to our tax regime may sound too boring to be an immediate threat – or the solutions too expensive to consider in the short-term.

But, as I tell my clients, the last thing they want is to switch their accounting system over at a moment’s notice. After all, this shift may require investment – in hardware, online accounting software and in people who know how to use them.

But MTD brings with it opportunities too. Once you’re up and running, you can pay your tax in real-time and keep internal financial records up to date, so there are no more nasty surprises – such as a forgotten deadline.

This accurate information also helps business owners to monitor performance, assess risk, and plot opportunities based on visible data trends.

Assess your approach

The more you plan, the easier digitisation becomes. Staying on top of tax means fewer chances of information being lost or unreferenced – which allows you to be more proactive.

Because we all know that the less reactive we are, the more prepared we are for the future.

So plan ahead by the bucket load. There is no secret recipe to good tax planning– just talk to  your tax advisor.

Karen McLellan is a specialist in tax mitigation at Haines Watts.