Making Tax Digital (MTD) is a strategy implemented by the UK government in 2019 with the goal of making tax filing easier for individuals and businesses, helping them better understand their finances. This shift has made it necessary for businesses, especially those in Stratford, to revaluate their financial processes and reporting practices in order to ensure compliance—a task that often brings with itself significant challenges, where inaccuracy can lead to hefty penalties. This is where our proficient accountants’ step in to share your burden.
In this blog post, we will explore in detail the impact of MTD on UK businesses, the changes it has brought to the UK tax system, and how accountant firms in Stratford can help you ensure MTD compliance.
Understanding Making Tax Digital (MTD)
MTD is a multi-phase initiative undertaken by the UK government to digitise the tax system and make it simple. During its first phase, MTD was only applicable to businesses registered under Value Added Tax (VAT). However, in its second phase, it replaced annual Self-Assessment Tax returns, with the goal to cover Income Tax for self-employed business owners and landlords by 2024. It is expected that MTD will cover partnerships with individual partners by April 2025. According to the HMRC, in its third stage, scheduled to be implemented post-2026, the programme will also include Corporation Tax within its scope.
Changes In The UK Tax System
MTD has brought a significant shift in the tax filing process for businesses and individuals in the UK. Replacing the traditional annual Self-Assessment Tax return, it has made it mandatory for self-employed business owners and landlords falling under the UK tax system to submit quarterly reports on income and expenses to HMRC. The deadlines for report submissions are set at 5 August, 5 November, 5 February, and 5 May, aligning with the UK’s financial year starting on 6 April 2022.
This new digital system demands that organisations adopt digital record keeping practices and use accounting software to maintain compliance with its parameters. To establish an uninterrupted electronic information chain from the accounting system to the VAT return, HMRC has also made it compulsory that businesses establish digital links through their systems.
While most businesses fall under MTD’s regulations, certain companies and individuals, including charities, community amateur sports clubs, potentially insolvent businesses, and individuals facing challenges in digitising their accounts due to age, disabilities, religious restrictions, or geographic remoteness, continue to be exempt from its purview.
Challenges And Solutions
While the implementation of this new digital system has brought with it numerous benefits, it has also made accuracy in reporting and timely submission mandatory for all, making accounting support a necessity for businesses. However, acquiring such services at industry standards and deploying them at an operational scale is expensive and resource consuming. Many businesses can’t afford maintaining an in-house accounting division, which puts them at risk of noncompliance.
This is where outsourced accounting services come into play. Outsourcing financial services to an accountant firm in Stratford offers several advantages to businesses during this transitionary period. It gives them access to top-notch operating software and experts, helps them stay updated on MTD policies, and ensures compliance with best practices for bookkeeping.
How Accountants In Stratford Can Help With MTD Compliance
Outsourced accountants in Stratford play a pivotal role in assisting businesses with MTD compliance. Here’s how they contribute to a smooth transition:
Expert Guidance On MTD Compliance
Accountants in Stratford provide expert guidance on MTD compliance, ensuring businesses stay informed about the requirements and deadlines. This includes assistance with the adoption of digital record-keeping practices and using MTD-compliant accounting software.
Proactive Policy Monitoring
Accountants stay informed about the latest updates in MTD policies and proactively monitor changes. This proactive approach helps businesses avoid legal complications and ensures ongoing compliance with evolving tax regulations.
Client Advocacy With HMRC
In the event of a policy breach or any issues with HMRC, accountants in Stratford act as advocates before HMRC. This includes representing businesses, providing necessary documentation and navigating the resolution process.
Best Practices In Bookkeeping
Outsourced accountants go beyond mere compliance and guide businesses in adopting best practices for bookkeeping, optimising their financial processes through accurate record keeping and implementing efficient financial management strategies.
Resource Optimisation For Business Growth
Outsourcing an accountant in Stratford frees up valuable time and internal resources for organisations. This allows them to focus on generating new ideas, scaling-up strategies, and strengthening customer relationships, ultimately leading to business growth.
Conclusion
Navigating MTD compliance requires a strategic approach, and businesses can leverage the expertise of accountant firms in Stratford to ensure a smooth transition while optimising resources for sustained growth. As the UK market recovers from the impacts of COVID, outsourcing accounting services emerges as a financially prudent decision for businesses striving to align with MTD policies and secure a resilient financial future.
Experience Seamless MTD Compliance With Ultimate Accounting & Tax Solutions
At Ultimate Accounting & Tax Solutions, we are well-equipped with MTD-compliant software like SAGE, QUICKBOOK, Xero, Iris, CCH, etc., tailored to business needs. Our accountants in Stratford ensure accurate record-keeping, timely VAT reports, and comprehensive management reports. Don’t let non-compliance jeopardise your business; call us today for tailored solutions and navigate MTD effortlessly with confidence.
