Making tax digital-a step by step guide for accountants
Digitalization is influencing everyone in the 21st century and tax is no exception. Making Tax digital (MTD) is the HMRC’s own plan to use the tech revolution to evolve and transform the British tax system and Self assesment tax returns. They mainly aim to reduce errors and enhance efficiency across the board by 2020. The entire business environment in the country is gearing up for this gargantuan change and everyone needs to know where they stand before MTD is finally rolled out. Despite the importance of this brand-new implementation, there still exists a degree of uncertainty surrounding the scheme as it has suffered setbacks in the past. Certain business heads and financial professionals will need to educate themselves on the nuances of the scheme much sooner than others to take on the challenges of an all-digital tax world.
Here is an official step-by-step guide to Making Tax Digital:
Allocate time to plan: Companies should focus on developing MTD strategies suitable for their respective business operations and set aside time to hold discussions and formulate alternative plans of action to meet unexpected contingencies. At this stage they can identify an MTD champion for their practice ad review their software options.
Train staff: Companies should train their staff on the way digital tax functions and educate them on updated concepts and ideas. They have to become thorough with the basics so they can explain it to clients and incorporate it in their practices. They should be asked to research about MTD and do a presentation on it to get a broad view on the process and figure out how the details work.
Make arrangements for workflow and cash flow: Companies which specialize in tax and compliance should expect changes in their operations. They should make provisions for staff requirements and even out cash flow to cover all unforeseen expenses and keep a constant check on spending patterns as they may need to be adjusted in line with revenue.
Prepare clients: Many businesses firms think the transition to MTD will be disruptive as the entire scheme of things seems intimidating. outsourced accounting firms should use this opportunity to put their skills to use and keep their clients at ease. They should clearly elucidate the difference between the old scheme and the new one and inform them on how the changes will affect their operations. This way companies won’t be kept in the dark about things and transparency is ensured.
Software requirements: Clients have to submit their taxes online therefore software is an important matter that has to be considered. Businesses can initially learn by using existing software and after learning the ropes, move on to the complex and updated software. They should check to see that the system they choose supports online filing with HMRC. accounting and bookkeeping services software does more than just taxes and comes loaded with plenty of other smart features such as KPI dashboards, mobile invoicing, daily bank rec and more. The right choice will give everyone stronger insights and efficient control over the business.
The change may seem difficult at first but it has numerous advantages such as helping companies establish more contact with clients. Digital tax will be here in a blink of an eye and companies should make use of the opportunity to deliver the kind of service that will take them the extra mile.