Want to simplify the process of completing annual taxes?
If you could simplify and make more efficient the process of completing annual taxes, would you jump at the chance to do it? The government has said it believes that digitising the tax process is the key to enabling businesses to handle finances more effectively. Its Making Tax Digital initiative is designed to make it much easier for any enterprise to stay on top of day-to-day accounts by moving to a digital system – starting with VAT.
Making Tax Digital
The Making Tax Digital initiative will take effect from April 2019 when businesses that are already registered for VAT will be required to set up a digital tax account and file quarterly returns online. For now, the digital switch only applies to VAT but the government’s plan is, eventually, to roll out an online system for all taxes. In fact, as early as April 2020 businesses could be required to keep digital records and update HMRC quarterly for other taxes, such as corporation tax.
Why a digital tax process is beneficial
Not every business is required to go digital under the Making Tax Digital initiative, only those already over the VAT threshold. However, it’s clear that the government’s intention is to move to a wholly digital system for all taxes in the near future. This is because there are clear benefits to engaging with a digital tax process, not just for HMRC but for all enterprises dealing with an annual tax burden.
- Better cash flow forecasting. A digital tax process makes it much easier to access key information to make cash flow forecasting more accurate.
- True perspective on finances. For many businesses, the tax process is a once a year event that is stressful and often rushed. Digitising the way that tax is handled means that, at any time, it will be possible to get a true perspective on the business accounts. This will be especially useful once the HMRC requirement for businesses to submit tax summaries at least quarterly through software kicks in.
- A more transparent approach to tax. HMRC is moving towards a system of automatic updates that requires businesses to be far more transparent in the way that tax is handled and financial information communicated. The use of software will become standard so for those organisations keen to get ahead of the curve, digitising tax processes now will be a significant advantage.
- Operational improvement. A digital tax process has the potential to transform financial operations in businesses of all sizes, introducing much greater efficiency and boosting profitability.
- Easy compliance. No organisation wants to find themselves having difficult discussions with HMRC or being investigated at an uncomfortable time. Moving towards a digital tax process now will enable an easy transition into compliance and one that removes a lot of uncertainty from the process.
As part of the move to Making Tax Digital, SunSystems is being developed to support submission to the HMRC.
SunSystems is already trusted by more than 9,000 organisations globally. The right accounting software has a key role to play in digitizing financial and tax processes so that businesses can enjoy all the benefits – Contact FinanSys today to find out what implementing SunSystems could do for your organisation.