The introduction of Making Tax Digital may seem like a distant memory, but the beginning of April 2020 was set to mark the end of HMRC’s soft landing period, which had provided a ‘light touch’ to non-compliance with the new rules.
Yet due to the present-day pressures facing businesses during the Coronavirus pandemic, HMRC has announced that it will postpone its original plans and has introduced a one-year extension to 1 April 2021.
The soft landing period offers greater leniency to those businesses that struggle to comply with Making Tax Digital and ensure their systems become 100 per cent digitally linked.
Regardless of the extension, every business must work to comply with the new rules and get their house in order.
HMRC has highlighted its ambition to become “one of the most digitally-advanced tax administrations in the world”. Its commitment to digital tax will ensure the system becomes more effective, more efficient and easier for businesses and individuals to correctly calculate what they owe and provide a real time view of their tax affairs.
According to the latest Government figures, more than 1.4 million businesses are now signed up to Making Tax Digital for VAT, with some four million VAT Returns already being submitted through digital means.
To unlock the full benefits of digital taxation, HMRC looks to be pressing ahead with its plans to extend the system to more businesses and other taxes. A beta trial remains underway for quarterly Income Tax filing, which is expected to be followed by a pilot to Corporation Tax.
Here at Champion Accountants, we continue to support our clients in embracing digital accountancy software, including Sage Business Cloud and Xero, ensuring that we match their organisation with a digital tax platform that is tailored to their current and future needs.
Making Tax Digital will continue to provide owners and management teams with a real time overview of their financial position, which in present day circumstances, can be the lifeblood of many businesses. Together with our consultancy approach, we help our clients to analyse and interpret this raft of data to support key decision making and provide timely and accurate financial and performance information.
To find out more, contact your Champion advisor.