MTD: Going Digital in Advance of Making Tax Digital

From 6 April 2023, all unincorporated businesses will have to keep their business records in a digital format and submit quarterly reports derived from those records to HMRC using MTD-compatible software. These are the basic obligations under making tax digital for income tax self-assessment (MTD ITSA).

Eligible Software & Digital Record-Keeping

The start date of MTD ITSA is less than two years away so it is a good idea to start preparing now. However, this digitisation is not as daunting as you may think.

Spreadsheets qualify as a digital format and HMRC will continue to accept them as a digital record for the foreseeable future. A taxpayer who records all of their business income and expenses on a spreadsheet and uses bridging software to read the relevant totals from that spreadsheet and submit them, without rekeying, to HMRC will meet their MTD ITSA obligations.

More complex businesses may find that they need to link several pieces of software to comply with the MTD regulations.

For example, a car hire firm has an automated booking system that generates the order and sends the invoice to the customer. It uses a separate system to record the expenses of the business. Under MTD the booking system needs to be digitally linked to the expenses recording system, perhaps by both systems being digitally connected to the accounts production software which also submits the MTD reports to HMRC.

Work With an Experienced Accounting Team in Preparation of MTD

We can advise you on the different forms of accounting software that can help your business get ready for MTD when it starts in 2023. To find out more about our services, contact Newnham & Son today and one of our friendly team members will be happy to answer any questions you may have!

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