In March many businesses were signed up to be part of the Making Tax Digital pilot scheme.
Since April 2019 all business that are required to submit a VAT return also had to make the transition.
What is the transition?
Making Tax Digital means that all of a business’ financial information must be processed online, on a regular basis, and submitted to HMRC digitally. HMRC Approved software must also be used.
This is an effort to simplify the way that businesses submit their financial information to HMRC.
The Two Big Problems So Far…
However, it is being reported that two things have happened meaning that mistakes are already being made:
- Some accountants have promised that the system is more simple than it really is.
- Business owners aren’t learning how to use the software properly.
This is causing all sorts of problems and the blame is falling on the business owner.
Errors Are Being Made Across The Country
What a promise! Of course, this sounds great, and is what probably convinced the business owner to choose the accountant!
However, there is so much more that you need to be aware of as a business owner when making this important change.
You will be transitioning to a brand new piece of software to submit your financials to HMRC. This will take patience and lots of learning but, in the long term, should indeed make things more simple and straightforward.
The reported incident above led to the business owner accidentally over submitting £9,000 in their return. This was due to an error in the way the system was set up.
It is believed that retrieving the money will be a long and difficult process, and that HMRC could potentially submit a ‘careless error’ report which could result in a penalty.
Be Aware Of Making Tax Digital
Whenever you’re starting on a brand new system it’s important to make sure you are familiar with how it works.
We are accountants that believe that the business owner should understand how to get the most out of the software they use.
This case is evidence that there might be many others though, who would rather cut corners.
Ensure that you understand the systems you use, ask questions, and be as thorough as you can.
Always remember that taking the time to do your own research will also massively benefit you.
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