MTD – Making Tax Digital

In an ever increasingly joined up world, where most people pay for goods and services with plastic and people bank online more and more, it was only a matter of time until we see the various government agencies request that we pay our dues electronically.

Quite a while back HMRC laid out its ambitions for Making Tax Digital (MTD). From the viewpoint of businesses, i.e. Sole Traders, Limited Companies and Partnerships, those paying VAT and other taxes would need move away from submitting their returns via the HMRC online portal and instead begin using software that connected to HMRC and submitted the data.

Some delays have occured and more have been suggested including from the House of Lords and even in the shadow of Brexit there seems to be little evidence that HMRC will waver in its ambition that on 31st March those businesses with turnover in excess of the VAT threshold £85K will have to submit VAT returns using MTD compatible systems.

Are we walking in to a mess. The jury is out but based on the current level of proficient usage of accountancy software which anecdotally is not good it looks likely that the accounting profession will have to take up the slack. Does you average plumber or mechanic want to learn the complexities of Quick Books or Xero. Learn it to the point where they can confidently submit a correct VAT return and “gulp” in the future a corporation tax return.

In the discussion section of on MTD article the following entry hits home and hints at the trouble that may be ahead.

“For the very smallest of clients I deal with not one have been able to understand Sage or Xero and I am unable to spend hours trying to teach them how to use these systems when failure is almost guaranteed.

There is a fundamental mismatch between the task required of the user and the tools they have to hand. Only when the software tools available to business work to a simple universal standard coding system that is easy to use and highly accurate will the notion of fast and accurate tax returns from the end user become a possibility.

For over 40 years the CARL accountancy coding system has provided the means for business owners to code up their accounts accurately. At the time of writing we are in the midst of implementing MTD VAT in our CARL software but don’t forget you can still use us to get your accounts done and VAT returns done much faster and we can tell you how.

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