What is Making Tax Digital?
Everyone's talking about Making Tax Digital (MTD), but what actually is it and what does it mean for the UK's farmers?
In a nutshell MTD is a major part of the government’s broader plan to digitise the economy, designed to make it more efficient to collect tax, submit returns and ensure the right tax is being paid.
The days of keeping receipts stored away in a shoe box till the end of the year is over. MTD means that VAT-registered businesses above the threshold of £85k annual revenue will need to keep digital records and file VAT returns every 3 months via a compatible software. Xero is leading the way by being in the first wave of software suppliers supporting MTD for VAT, with our integration with Xero Figured provides UK farmers MTD compliant platform.
When does it kick in?
Don’t panic, there is still a few months to figure out how to implement MTD for your business. It won’t be mandatory to submit your quarterly VAT returns via a compatible software until April 2019, however now is a great time to talk to your accountant about the changes.
This shift poses a great opportunity to find an MTD compliant solution and reset the farms finances. To not only get on top of VAT but also enable the farming team to leverage a deeper understanding of your financial position, and to support better decision making on the farm. Using an Agri financial platform to manage farming operations opens the ability to quickly whip up plans for best and worst case scenarios to see the impact of changes on prices and input costs. You’re then better prepared when unexpected events occur, such as understanding the impact of the drought this summer, or potential future subsidy variations.
VAT is just the first step, there’s still more to come - with 2020 being the deadline for HMRC to have a fully digital tax system. But with the help of your advisors and online platforms, such as Xero and Figured, you can get ahead of the game. To find out more don’t hesitate to contact us via the little green chat bubble on Figured.com or give the UK team a call on 07514 082151.