Winter Economy Plan – Summary
September 28, 2020
The North East SME community is ‘dangerously underprepared’ for the arrival and impact of the government’s flagship Making Tax Digital initiative.
That’s the view of Stephen Slater, director of commercial services at RMT Accountants & Business Advisors, with less than a year before it becomes compulsory for all firms with an annual turnover above £85,000 to keep and file their VAT records digitally.
Making Tax Digital (MTD) will require businesses to keep digital records of invoices, receipts and other documentation, and to use systems which allow for information to be sent digitally to HMRC on a quarterly basis.
And while a range of incentives and encouragements will be offered to businesses to come into step with the requirements of the new system, there will also be a parallel range of penalties and fines that the taxman can levy on those that don’t.
Stephen Slater says: “We’ve been speaking to our clients about what Making Tax Digital will mean for them for the last year, but in wider conversations around the region, my experience is that a large proportion of SMEs haven’t begun to think about its implications, let alone put anything in place to address them.
“The implementation delays that have happened may have something to do with this, but the noises coming from HMRC and the additional inspectors that they’re currently recruiting to manage the extra work that MTD will bring would suggest the April 2019 start date for digital VAT returns is likely to be firm.
“Being so dangerously underprepared for this start date could have serious operational and financial implications for the region’s SMEs, and time is very much of the essence for making sure that they don’t suffer problems that they could avoid by acting now.”
The Making Tax Digital initiative is designed to allow the taxation process to be conducted in real time by making better use of information through a single financial account, in much in the same way as online banking works.
It was originally due to be fully in place for all businesses by 2018, but implementation has been delayed twice by HM Treasury to allow for the required IT systems to be fully developed and tested.
Full digital quarterly reporting for other financial information, such as corporation and incomes taxes, is not scheduled to begin until at least 2020, but presuming digital VAT record keeping runs as HMRC expects, Stephen Slater doesn’t believe there will be any further delays in these new rules coming in force.
He continues: “April 2019 may seem a long way away at the moment, but when you think that it’s only three or four more VAT quarters away, the imperative for businesses to act now becomes very clear.
“Our expectation is that companies will be looking for additional support in meeting their MTD responsibilities and we are building up our commercial services team to ensure we have the appropriate expertise on hand for clients.
“There’s a great deal of information about Making Tax Digital on the HMRC website, and owner/managers who haven’t yet begun preparing for what it will mean for their businesses would be well advised to start investigating where they stand as soon as they can.”
RMT will be running a series of Making Tax Digital sessions over the coming months. To register your interest and receive more information on these sessions, please email firstname.lastname@example.org