HMRC announced last week that it has opened a Making Tax Digital income tax pilot for self-employed businesses.
Eligible businesses are able to voluntarily use software that will manage their business records digitally and directly send their income tax updates to HMRC, in place of the annual Self Assessment return.
The testing phase will last just under a year, with a version for unincorporated landlords due to follow next month.
While an important step in the progression of MTD entering the public realm, this announcement is being regarded by HMRC as very much as ‘soft launch’.
With the announcement, the tax body gave a list of approved software for sending Income Tax updates, which included only two software companies, IRIS and Rhino.
The pilot is due to be released next month, alongside the start of VAT MTD private testing.
While Pandle is not currently on the list of software for sending Income Tax updates, our team of developers will be working on this within the coming months.
How to prepare for Making Tax Digital
If you don’t think your accounting firm is yet prepared for the changeover to MTD, there are a few precautions you can take to ensure you’re ready well before the initiative is implemented.
When a huge change such as MTD is due to take place, there’s really only one way to prepare – plan.
Get your affairs in order and offer your accountants the support they will need before it becomes too late. This might include signing them up for courses or training days that will help them better understand MTD, or by offering them a say in the cloud accounting software you get.
When planning ahead you should consider the number of clients you have and time that will be needed with each of them when explaining processes.
Think about your recruitment process
If you do decide to hire new accountants as part of your plan to get ready for the MTD takeover, it’s important to factor in what skills your interviewees have in relation to the technology they’ll need to learn to use.
Consider any experience they have with cloud accounting software, or if they have a history in helping clients get used to new processes.
This will help no-end when your firm is inundated with unnerved clients worried about the MTD processes in the weeks running up to is implantation.
Join the cloud
Finally, the best way for you to prepare for the arrival of MTD is to get your firm and your clients using cloud accounting software.
Getting this in place sooner rather than later will make your life an awful lot easier, and save plenty of the stress down the line.
You’ll need to look at the best options for your firm. If you cater to clients with complex tax affairs, you’ll most likely be best investing in a slightly more expensive option from one of the big names. However, if your client base is mainly small businesses and freelancer, you’ll easily be able to use a simple, intuitive and affordable solution such as Pandle.
Feeling unnerved by the looming prospect of Making Tax Digital? Get your finances in order before the panic sets in by signing up with Pandle today. We’ll help you simplify your accounts and manage your bookkeeping in plenty of time for the big digital switch.