For the past year, we have been keeping you updated with the latest changes in the ‘Making Tax Digital’ transition. It has now been announced that as of the 6th April 2023, all unincorporated businesses must have their business records stored in a digital format. Moving forward, they will need to submit their quarterly reports from these records to HMRC using only MTD-compatible software.
How To Go Digital Before 2023
As the start date for the MTD ITSA (making tax digital for income self assessment) is less than two years away, beginning your preparations now will prove hugely beneficial. Although this may sound daunting, there are a number of ways that you can make the process more straightforward.
First and foremost, it is important to keep in mind that spreadsheets in a digital format will qualify, and they will continue to be accepted by HMRC for the foreseeable future. This means that, as a taxpayer, you can begin to record all of your business income and expenses on spreadsheets. From here, you will need to use bridging software to read the data from the spreadsheet, which, when submitted to HMRC, will meet their requirements.
If you have a more complex business, you will likely find that you will need to link more than one piece of software to ensure your compliance with the MTD regulations. A great example of this is a car hire company. They will be using an automated booking system that automatically accepts bookings and sends an invoice to the customer. A different system will then be used to record the businesses own expenses. In this instance, to meet the MTD guidelines, the booking system will need to be digitally linked to the expenses recording system; these will then be linked to the accounts production software responsible for submitting reports to HMRC.
We Can Advise You On Software
If you are unsure which accounting software best fits your type of business, our team are always happy to help. We can advise you on the best suitable option to help your business to prepare for 2023.