Why Software For Making Tax Digital Is Essential For Your Business
by Campbell McLeish on
The Making Tax Digital (MTD) initiative was launched back in April 2019 with the eventual aim of going completely paperless. By bringing the entire tax system online, HMRC plans to reduce errors and false reporting in order to set the standard for the rest of the world.
MTD is being rolled out in phases, and as you probably know, MTD for VAT has already started.
However, many businesses are still hesitant about switching to a full MTD-compatible accounting solution. Or, simply don’t have the time or budget for a fully implemented system.
Here, we explore why software for MTD is essential for your business.
Why do businesses need MTD software?
If your business is VAT-registered with VATable sales above the threshold (currently £85,000), you’ll need to store any records of transactions affected by VAT digitally and tie this in with HMRC’s systems.
This is best achieved through the use of MTD-compatible software solutions, which are capable of:
- Recording and preserving digital records
- Receiving information via an API platform
- Providing information and returns to HMRC using an API platform
Some solutions can perform all of the above, while some may require integrations to give you full capabilities.
While MTD-compatible software solutions are great for many businesses, spreadsheets can be utilised for a quicker and more cost-efficient approach. This requires additional bridging software to the file the return and may need some extra work to ensure your spreadsheet data is formatted correctly. However, bridging software is a great alternative to the full MTD-complaint accounting solutions.
Bridging software can also be used to link other platforms, such as Microsoft Dynamics GP to ensure VAT returns are submitted to HMRC.
The benefits of bridging software for MTD
- Cheap - Fully MTD-complaint accounting solutions aren’t cheap. Often, the bill to switch from spreadsheets or non-compatible systems just isn’t viable for small businesses. Bridging software allows you to continue with your existing bookkeeping method and become MTD compliant without having to heavily invest.
- Minimal disruption - Bridging software for MTD ensures minimal disruption to your workflow. A minor addition to your spreadsheet is a lot easier to handle than a full migration.
- Compliance – By communicating with HMRC’s MTD systems, bridging software allows the relevant information to be sent to HMRC via your spreadsheet or non-complaint bookkeeping software.
HMRC recognised software
All in all, to ensure your business’s VAT affairs are 100% complaint with new legislation, using HMRC recognised software is the way forward. HMRC have pre-tested a range of software solutions with their new MTD systems and produced a useful list of providers.
At Nolan, we’ve engineered our very own cloud VAT submission software. Recognised by HMRC, the Nolan Cloud Services VAT Submission helps you link between your accounting application and HMRC or can be used as a bridge to access the HMRC portal. Both processes fulfil the MTD requirements for digitally submitting your VAT return.
At £250 per VAT entity, per year, Nolan Cloud Services VAT Submission is a software solution you can rely on, without breaking the bank.