As we move into a new era of taxation, businesses need to be ready to handle these coming changes. For example, if you – like many other businesses – happen to use software to manage your Value Added Tax (VAT), you might need to make a change soon. This is because, with the upcoming ‘Making Tax Digital’ program by HM Revenue and Customs, taxation is changing massively. It will be easier in the long-term, but for now it could cause you some issues.
The first question you need to ask yourself, then, is this: does the accounting software you use work with Making Tax Digital for VAT?
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Why does this matter?
Put simply, any businesses whose turnover exceeds VAT registration thresholds will need to maintain digital records moving forward. If you were to use software that is not Making Tax Digital for VAT (MTDfVAT) applicable, you won’t be able to use it any longer. So, you should look to verify that your present software is MTDfVAT compatible. If it is, then you can continue to work with that software and enjoy an easier time managing your accounts and VAT records.
Should it not work, though, you will need to make sure that you use MTDfVAT software. Since regulation came in during February 2018, it’s no longer something that you can put off. You can check out a full list of MTDfVAT software suppliers here.
Why MTDfVAT Compliance Matters
Should you fail to work with the new regulation, then you will find it much harder to manage your business. Electronic changes to how we manage taxation have been coming for some time, and this is the next step in modernizing a system that has, for some time, been out of sync with modern technology.
Taxation is often an arduous, challenging process – and dealing with VAT is no different. If you want to avoid any headaches or penalties for failure to comply with modern changes, you should invest in MTDfVAT software packages.
Being MTD compliant as a business is so important, and it will play a critical role in making sure that your business can stay ahead of regulatory changes to come in the future. Any business which is serious about making long-term changes to how it works will need to stay in immediate compliance of these changes, after all.
While Making Tax Digital might seem like a headache in some quarters, it will vastly improve how we operate as businesses in the long-term. For that reason, you should look to try and find the right software package to operate with. When you choose the right system, it can only have a positive impact on the way that your business operates.
Best of all? Your challenges in dealing with VAT arrangements will become much easier to deal with. If you haven’t found MTDfVAT compliant software yet, now is the time.