Why is making tax digital good for your business?
Making Tax Digital (MTD) is being introduced to allow the UK tax system to be as efficient, effective, and as easy to follow as possible. Businesses with a VAT turnover above the £85,000 threshold are already required to keep a digital record and submit their VAT returns using MTD compatible software. For businesses below this threshold, the deadline for making the switch to digital is April 2022.
Many business owners will be uncertain about the introduction of this initiative, and will be wondering about the benefits and implications associated with it. Businesses must be adaptable in the face of these changes, and should have a clear plan for navigating through any alterations.
Making Tax Digital is a change that should be embraced with no hesitation, as it will actually bring about numerous benefits for your company.
1. Enables digitisation
There are many SMEs that still carry out accounting and tax-related activities via more traditional methods. These approaches may work for some, if it’s a system they’ve used for a long time, however there are more effective methods. When businesses invest in digital technology they can inherit a multitude of benefits, such as improved security, greater cost effectiveness, and remote access.
2. Facilitates growth
Adopting a cloud strategy is often recognised as the first step in digital transformation. Using cloud based accounting software allows businesses to comply with the new regulation and elevate the way in which their processes run too. It facilitates automation to a large extent, allowing you to save time, and to gain greater insights from your valuable data. This automation and knowledge facilitates growth and increases productivity and revenue through enhanced activities.
3. Decreases human error
It is important for businesses to make sure they get their tax right and avoid costly mistakes. Investing in technology is worth it. It allows more time will be spent driving the business forward, rather than correcting mistakes.
4. Increases efficiency
Making tax digital will allow businesses to easily access their information from one platform. The benefits of digitisation are real, and are already being felt by those that have embraced it early. Making Tax digital has simply speeded up the large-scale transition.
VAT returns as we know them will become a distant memory, as the government encourage digital transformation. The move to making tax digital will involve change in the way businesses handle their financial reporting, which can be complex for some which is why the government have deferred the date for some companies, in exceptional circumstances.
Businesses should press ahead with these changes, not only to be compliant, and to stay ahead of the curve, but to gain a multitude of benefits too.