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Making Tax Digital: can your IT keep up?

Making Tax Digital (MTD) is aiming to revamp the tax system, transforming it into a completely digital model. This should make the whole tax process more streamlined, as well as improving efficiency, making it easier for businesses to keep on top of their taxes.

But, as with any digital overhaul, your IT needs to be able to keep up and support these changes.

What does it mean for me?

The first phase of making tax digital was introduced in 2019 and aims to make tax records and returns completely paperless by going digital. This should make it easier for businesses to manage their taxes and easily find, view and make changes.

The full digital overhaul is being managed in stages. 2019 saw the first phase affect VAT-registered firms with a taxable turnover above £85,000. The next stage of making tax digital will see all VAT-registered businesses becoming compliant for VAT from April 2022, with self-assessment taxpayers becoming compliant for income tax from April 2023.

Small Changes, Big Impact

Going digital may be a struggle for some firms, but there is no need to panic, as plenty of support is available. There are a range of apps and software that can help your business to make the change. Products like QuickBooks and Xero are good options for making tax digital, while an external advisor or agency can also help you make the change.

Installing new software, or developing your digital processes, in order to keep up can have an impact on your existing IT. However, there are some simple changes you can make yourself to help your IT keep up with making tax digital – and ensure the process is as smooth and efficient as possible.

1. Ensure updates to all applications, software and devices are completed quickly and regularly. Most devices give you the option to automate these updates, and this is a handy feature as it eliminates the need for manually installing the updates. Programmes that are not up to date can slow down performance and affect your device’s overall speed. Keeping on top of updates also ensures that any security vulnerabilities and useability issues are fixed, while you will also benefit from new and improved features as soon as they are available.
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2. We recommend that you regularly perform an IT health check. Make sure all your files are backed up, and run regular anti-virus checks to ensure everything is performing as it should. A data centre is a great option for this as it ensures that security software is deployed and maintained across your entire network, while keeping your files, data and everything else secure.
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3. If you install any new software to help with your digitisation, we recommend that you request a demonstration from the provider. They can show you the best, easiest way to use the software and answer any questions you may have. Obviously, you will learn more as you familiarise yourself with the software, but we always find that it’s useful to hit the ground running. This can save a lot of time and allow you to get on with the important job of running your business.
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4. Once you’re set up with new software, ensure all staff have access to training on how to use it. Whether this is from a trained individual within the team or through a session with the provider, it is important that everyone feels comfortable using the software. This will also help users spot anything out of the ordinary so that they can flag an issue as it arises or make you aware of areas where further training or guidance would be beneficial.

A Helping Hand

Making tax digital provides the perfect opportunity to optimise your IT. As with the tax system, many processes are going online – and even more so with the Covid-19 pandemic – so it is vital that your business stays ahead of the curve and is ready for digitisation. If you have any questions, or want to learn more about future-proofing your IT system, get in touch with a member of our team – we’re always happy to help.