What the Future Looks Like for Making Tax Digital

Now the dust has begun to settle over a tumultuous and uncertain snap general election, it’s time to consider that this will mean for bookkeeping and accountancy.

One of the huge changes that has been put on hold is HMRC’s Making Tax Digital (MTD) scheme. Plans for the digitisation of the initiative have been delayed, as announced two weeks ago.

A reformed timeline for Making Tax Digital (MTD) means it won’t be until 2020 small business’ accounts will become digitised. However, while small business owners have more time to plan for MTD, it doesn’t mean it should be forgotten.

What happens next

The new timeline for MTD will be largely focused on VAT, as businesses above the VAT threshold (currently £85,000) will be the only ones required to keep digital records beginning 2019.

The delay was enforced after severe criticism was given on how smaller businesses would manage the switch to MTD on such a strict timeline.

MPs in particular have condemned the unreasonable timeline, something reiterated by tax consultant for RSM, Andrew Hubbard: “The timetable was already under considerable pressure before the election”.

Prior to the announcement of a delay, Hubbard commented: “The unexpected outcome of the general election is an ideal opportunity for a pause for thought, followed by a realistic reassessment of the timetable.”

It’s likely that the next updates we receive on MTD will come in this year’s Autumn Budget.

How to prepare your clients

While a delay is exactly what small businesses needed to get ready for MTD, the best thing for accountants and bookkeepers to do is continue to help their clients get prepared for when MTD does come into effect.

Help your clients prepare by prioritising the following:

  • How MTD will change your pricing structures
  • The software you’ll use to implement MTD
  • How you will educate clients on MTD and how it will affect their business

Once you have figured out how your company will manage the change, you will be able to help your clients switch over to a digital tax system much more smoothly.

Resources and guides will be hugely important while explaining MTD to your clients. Our article on Preparing Your Small Business for Making Tax Digital is aimed specifically at helping small businesses get ready for the switch to digital.

Have you chosen a cloud accounting software to see you and your clients through MTD?

Get in touch with Pandle’s team on 0203 393 7434 to see how our simple and free software can help guide your clients through the digital switchover.

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