Life is Easier When Your Tax is Digital
Yep, you read that right: it is a government initiative to help them keep on top of their affairs by making tax digital.
An initiative named Making Tax Digital aims to become one of the most digitally advanced tax administrations in the world, changing the system forever, and hopefully starting a trend so that more and more people can enjoy just a convenience.
This would overall transform how people do taxes, making the process more effective, more efficient, and easier for everyone to get things right the first time.
Digital VAT
The most common tax we encounter, the Value Added Tax, is also seeing a big improvement through the Making Tax Digital efforts.There’s now the MTD for VAT, wherein VAT-registered businesses with a considerable taxable turnover (above the VAT threshold) are now required to use the MTD service for digital record keeping.
They can use digital VAT software for this, so keeping records digitally is easy, as well as being able to submit their VAT returns through it.
What this means for your business
Getting your tax right the first time is almost impossible, because of all the steps and processes involved.Without proper knowledge in doing your taxes, you might be redoing it a couple more times before you finally get the hang of it. These are avoidable mistakes, but again, not everyone is savvy enough to do their taxes right the first time. With Making Tax Digital, there will be improved accuracy in doing taxes, takes to the digital records used for it.
The software products to support it will also boost efficiency while improving the learning curve for first-time users.
And this is just at an individual taxpayer level. Imagine the joy of business all around because of this. The improved accuracy through digital records makes it easier to sort through piles and piles of information.
Even after a short period of running your business, you’ll accumulate a mountain of information that you need to properly file your taxes. Imagine doing that once a year—you’ll find yourself knee-deep in numbers you can barely comprehend, so you’ll be forced to hire an expert to do everything for you.
Businesses are strongly encouraged to transition early and immediately. They have at least a year to do so and will not be mandating MTD for new taxes or businesses until 2020.
This is a perfect time to be familiar with the system and see how well you can adapt to it. As an individual or a business owner, this really changes the process. It is your responsibility to learn more about it and see how it applies to all your affairs.
Once it’s mandated, everyone is expected to use it properly, and be able to do their taxes without any problems in the years to come.
Truly, this is technology at work, improving existing processes to make it work for everyone.
