Making Tax Digital will require potentially significant changes to your accounts department procedures and systems.
What is Making Tax Digital?
Making Tax Digital is an important change to UK tax regulation. It’s estimated that around £1bn of tax is currently not collected due to reliance on old methods of submitting tax returns. To improve the accuracy of business tax reporting and increase automation, the UK government will require tax returns to be submitted digitally.
The first major requirement will be for VAT submissions. As of 1 April 2019, VAT-registered businesses with a turnover above a threshold of £85,000 will need to keep and submit their VAT returns digitally.
Reporting on income tax and corporation tax will also need to be digitised by April 2020.
What do I need to prepare for Making Tax Digital?
To be able to submit tax returns digitally, companies will need to make changes to their accounting software. The government has created a Software Supplier list of applications and platforms that are – or are close to being – compliant with the new requirements.
The most commonly used platforms among these are Xero, IRIS, Sage and Microsoft Dynamics. Xero, Sage and IRIS all currently have versions of their platforms that are compliant now. However, it’s not clear if this covers all versions of these products, or if companies will need to switch versions (eg. companies might need to go from Sage on-premise to cloud versions). Companies therefore may be required to make updates to their accounting platforms.
Microsoft’s solution for Dynamics has reportedly been seen by HMRC and is understood to be close to being complete. The necessary application programming interface (API) for Microsoft Dynamics 365 Business Central will be released in Q1 2019. Microsoft Dynamics 365 for Finance and Operations is also understood to be covered by these two updates.
To prepare for the update, businesses using Dynamics NAV will first need to ensure that they are using version 2015 or above. If they are not, they will need to perform this upgrade first before proceeding with the API integration.
As it stands, companies using Microsoft Dynamics AX for their accounts will need to look at an alternative solution. While approved third party tools may appear, there is a strong likelihood that companies may need to consider migration onto newer Microsoft Dynamics platforms.
How Akita can help
As Akita currently assists many companies with their accounting software, we will be monitoring the latest updates about Making Tax Digital carefully.
For Microsoft Dynamics, we can assist with any API integrations that companies may need assistance with. We can also help Microsoft Dynamics NAV users to get up to the latest version to make the platform compliant with changes. And we can advise and undertake migrations from Microsoft Dynamics AX to other Dynamics platforms.
For other accounting software, should add-ons or upgrades be required we will be happy to assist where possible.
With such a significant change to important business data, we would also recommend it’s time to check your security. Whether it’s vulnerability scanning of your network, or a data security audit of the way you handle data, ensure that you don’t get caught out by changes.View More