MTD (Making Tax Digital) for VAT started in the year 2019 wherein the VAT registered companies with a turnover of more than £85,000 had to file their VAT Returns via MTD.
However, this year (2022) in the month of April, owing to the success of MTD, regardless of turnover, all the VAT registered companies need to file their returns digitally.
In other words, all the VAT registered companies need to switch to this online model to record their financial transactions and file their tax returns via integrated online accounting software, supporting MTD, to send the returns directly to the HMRC.
What’s the purpose behind MTD?
- And the answer to this question is simplification and increased efficiency.
- The aim of this rollout is, also, –
- To ease the tax filing
- To reduce the bloopers that happen while manual tax filing
- Help record financial transactions in a better manner &
- To lessen the usage of paper returns
Hence, everything will be executed from the company’s accounting software platforms and the HMRC’s website.
Who is Impacted by Making Tax Digital?
Businesses (small, medium, and large-sized) and accounting firms are the most affected by MTD for VAT. Businesses may choose to get their accounting and tax work delegated to accounting and bookkeeping firms.
Accountancy practices are overburdened with a number of client expectations and various client demands. They do not only have to execute the accounting & bookkeeping of their clients but also their own firm. Hence, somehow challenges them in meeting deadlines and impacts their firm’s productivity.
What are the challenges in following MTD?
Breaking the age-old habits
Businesses and accounting firms are now facing a lot of challenges due to the profound usage of technology and the latest accounting software programmes to keep all the records digitally. Most of them are still in a habit of filing their taxes in a traditional way.
Years of filing paper returns, of course, the habit cannot be changed overnight!
Businesses can select between quarterly and annual reporting when using MTD. And the ones that choose the former can be swamped by the workload and meeting deadlines.
Data Security & Privacy Fears
Privacy and data security are the top priorities for companies and accountants. Some of them might feel that sharing the transactions and bank data directly to HMRC via accounting software tools might invade their privacy or breach data security.
Role of Accounting Software Platforms in MTD
Well, the biggest role in Making Tax Digital is that of the accounting software programs and tools. Hence, there is a dire need to have technologically adept accountants who can leverage the software and deliver the desired outcome.
There is the term ‘MTD Compliant Software’ is frequently used, as such software integrates the HMRC’s gateway and VAT returns of the clients’ records. And the data or the final figures are shared on the HMRC’s website with the help of those software tools.
Naming some of the software – Sage, Xero, Quickbooks, Dext, Auto Entry, Freshbooks, etc.
How to make MTD for VAT a success with AcoBloom’s Co-sourcing approach?
AcoBloom will get tax right, and help accountancy practices get a foothold in tax filing digitally. With us, accounting firms can beat the MTD challenges and lead them to success.
As the new requirements are more significant than ever, accounting firms need to share their burden with accounting outsourcing firms like AcoBloom International, to meet their clients’ deadlines and speed up their clients’ tax filing.
Who doesn’t need well-trained accountants who possess in-depth knowledge of cloud-based accounting software and leverage it with full proficiency? And, that too, without bearing high costs on training them, hiring them or spending too much effort on retaining them.
Working with an accounting outsourcing team like us, will not only free up your time for carrying out other activities of the firm but increase your productivity manifold and ensure data security at all levels.
With AcoBloom, your accounting firm will bloom as we acquire a team of expert accountants, who are well-versed with the rules of HMRC and MTD for VAT, cloud-based accounting software like Xero, QuickBooks, Dext. Auto Entry, Sage.
For over 14 years, Acobloom has been a prominent provider of accounting and taxation outsourcing services. Contact us today at email@example.com to learn how our team of qualified, dedicated, and dependable specialists can assist you in scaling your business and providing a delightful experience to your customers.