MTD will make tax easy – here’s how it offers an opportunity for contractors

We admit, anything with the word tax in doesn’t sound all that thrilling does it – but Making Tax Digital (MTD) is set to be something of a game changer.

HMRC’s move to a digital tax system begins in earnest on April 1st with MTD for VAT (get yourself up to speed with what this change could mean for you here). MTD is set to see the antiqued, slow and error-prone HMRC systems replaced by something fast, reliable, modern and easy to use. We’ve experienced first hand how easy it’s been to integrate HMRC’s system with electronic accounting, you can see how we’ve ensured we’re MTD-ready here.

Change in any form can be daunting but Making Tax Digital (and digital recording as a whole) will introduce plenty of opportunities that contractors can be benefiting from.

Save time

No more piles of paperwork. Great MTD-ready software will take data from external sources, (banks, building societies, government departments) and feed it directly to HMRC. Reducing the onus of paperwork and record keeping for limited companies and ensuring you never have to enter the same information twice.

With all your business accounts kept up to date in your accounting software and with a lot of the admin automated, submitting your financial data to HMRC throughout the year should really be as simple as checking it over, filling in any missing information and pressing send. Freeing up your time from fiddly admin, so you can focus on driving business growth and productivity instead.

Spread the burden

Not only will sending a simple update every quarter save you time and energy, you can spread the burden financially so you don’t have one big hit every year. Throughout the year, having a clear picture of your tax position can help you plan and budget effectively as well as smoothing cash flow and gaining a better visibility of opportunities to reduce your company’s bill through tax planning.

Limit costly mistakes

Many businesses make mistakes inadvertently which can lead to pricey penalties. By reducing manual data entering, quarterly reporting and software that provides a real-time view of your finances makes these costly mistakes far easier to detect.

Better use of data

By 2020, HMRC states that businesses will have ‘a comprehensive financial picture in their digital account, just like they can with online banking’. MTD will provide a personalised view of all your company’s tax affairs. Along with access to prompts, advice and support online. Digital record keeping software will link to these HMRC systems, so your accountant can send and receive information directly. The result is a full picture of your tax affairs with increasing personal control.

Tax in real-time

By going digital, contractors will be able to keep a better track of tax-due and repayments owed. So you never have to worry about your tax bill again. You’ll also be able to plan and budget accordingly.

‘The inniAccounts software is robust and intuitive. I like that I have the information about my company accounts at my fingertips. I can see my up-to-date bank balance anytime; so I know exactly what money I’ve got to spend. Behind the scenes, the software takes off your company tax and VAT to give you an accurate figure of your finances so I can see what I can and can’t do financially.’

Lee Bailey, IT Consultant and inniAccounts client

Digital interactions with your accountant and HMRC

As well as providing you with a precise look at your figures, digital reporting lets you interact with both your accountant and HMRC in real-time. With traditional accountants, you would likely have to send over a file and wait for them to get caught up. With cloud-based accounting, your accountant has immediate access to your data. Allowing them to efficiently offer more in-depth and timely financial expertise.

‘For our accountants, Making Tax Digital will remove even more of the mundane manual tasks. They’ll be able to focus on developing and building the skills that add even more value to our customers.’

Matt Poyser, Client Experience Director at inniAccounts

We’ve found that digital records allow for a better relationship between accountants and their clients. Accountants have more time to focus on you and your personal objectives, so they can provide proactive advice rather than getting caught up in fiddly bits of administration.

The future of accounting is digital

If you’re already using online accounting software, you’ll already be benefiting from most of these opportunities – MTD will just further streamline the process. If you’re not, MTD isn’t just a case of companies staying compliant with HMRC; it’s a way to elevate how that company works by automating its processes, saving more time and gaining better control of its most important information. Using cloud business software can lead to average revenue growth of a huge 20%, so even if you don’t need to comply now, it’s well worth considering making the move to digital reporting.

Time to go digital

Whether you’re an existing client, looking for a hassle-free switch or simply want to brush up your knowledge – we’re here to make Making Tax Digital simple and provide you peace of mind. Preparing for digital tax starts with managing business accounts online. If you’re already using a competitive software like inniAccounts, the transition will be a smooth one. But if you’re making a change, it needn’t be a headache, MTD is a great opportunity to streamline your accounts and make your life easier with great software.

Learn how inniAccounts can help you with Making Tax Digital today.