Carl Reader explains how Making Tax Digital helps SMEs prepare for Brexit

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Carl Reader
Carl Reader, founder of the #BeYourOwnBoss movement and chairman of business advisory firm d&t,

Carl Reader, founder of the #BeYourOwnBoss movement and chairman of business advisory firm d&t, explains how the move over to Making Tax Digital could actually help businesses prepare for Brexit

This article is the view of the author and not necessarily of Ready for Brexit

The deadline for Making Tax Digital (MTD) is fast-approaching, and it is important that small businesses are as prepared as possible for the digitisation of all their tax and accounting processes. From 1 April 2019, VAT-registered businesses with a turnover above the threshold of £85,000 will be the first to be required to keep digital records and submit returns digitally to HMRC.

It will not have escaped the notice of small businesses that MTD is coming in at around the same time as the UK leaves the EU. Although completely unconnected, many small businesses will see the new legislation as just another issue to deal with along with Brexit. Once the new system is up and running, however, it will not only help small businesses run more smoothly, but it can even help with preparations for Brexit.

Post-Brexit, depending on the outcome, UK businesses operating internationally could well see changes to certain trade tariffs. However, when a business has instant access to information through financial management software, which is required in a post MTD world, a real-time view of financial health and data will be invaluable for those needing to combat any changes.

Bookkeeping is a process that small businesses are well versed in, however, just how well this is carried out varies enormously. Struggling to keep accurate and regular records is a significant issue and a haphazard approach to pulling information together as and when it’s requested is all too common. Despite the looming deadline, it is vital to alleviate confusion around MTD to help businesses effortlessly navigate this change.

Aside from creating a much-needed new standard for record-keeping, MTD is an integral part of the digital world that is driving a fundamental modification in how we work. It is symbolic of the Government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs. It signifies HMRC’s ambition to become one of the most digitally advanced tax administrations in the world.

It’s time we competed better against overseas competitors too – with other countries already starting to gain an edge in these areas. Spain has a near-live reporting scheme and Poland is leading the way – with all VAT-registered businesses conducting digital filing since January 2018. We must keep up so that we don’t lose out. 

To put it plainly, it’s all about bringing the UK into the 21st century and turning poorly managed, irregular and often error-ridden paper-trails into manageable, searchable and real-time data. It’s time to put away the crumpled-up receipts and make the move to cloud-based software for financial management.

A new research report from economists Volterra Partners, commissioned by Intuit QuickBooks, The Productivity Payout: UK Small Businesses and the Digital Economy, has found that MTD compliance in April 2019 will immediately catalyse an annual benefit of £6.9 billion in net gains in turnover and growth for the UK economy.

These spill-over benefits will drive increases in levels of productivity, by enabling better cash flow and human resources management and freeing up time for more productive activities such as sales, marketing or training. MTD could also be the catalyst for businesses to start realising the benefits of artificial intelligence and machine-learning data, which will generate real-time insights into the state of your finances, and will also be able to review funding options, forecast performance and plan for external factors such as Brexit.

In short, there has never been a better time to get on top of your finances. With MTD compliance you’ll be able to run your company more efficiently. Remember, MTD is a legal requirement and one you mustn’t avoid. Take a moment to look at the opportunities that come with this legislation and it will spur you on to make the most of it.

Choose to evolve with the changes, embrace a new way of working and better manage your business.

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