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AKING TAX DIGITAL
M for VAT , aka MTD , is just one ingredient of the government ' s strategy to digitise the tax affairs of individuals and businesses in the UK . It ’ s almost hard to believe that MTD came into effect over three years ago , back in 2019 , yet there are still some blurred lines for small businesses .
In simple terms , MTD is mandatory for all VATregistered businesses with a taxable turnover above the £ 85,000 VAT threshold to keep digital records and process their VAT return information through MTD-compatible software .
MTD aims to deliver a modern , trustworthy tax system , simplifying the tax process and supporting the UK in its goal of going digital .
And the expectation is that by signing up for MTD , businesses will quickly reap the rewards , which include reducing errors and saving valuable time when managing tax affairs , which in theory sounds very promising .
You ’ d think that with almost 1.6 million taxpayers having joined MTD for VAT and more than 11 million tax returns successfully submitted as of December 2021 , the scheme was rather popular – yet things seemed to have taken a slight tangent earlier in 2022 when the MTD requirements were extended to all VAT-registered businesses , including those that fall below the £ 85,000 threshold .
Having passed the November 1st cut-off , unsurprisingly , the scheme now includes many previously excluded small businesses – so what does this mean for the future ?
MTD opens up a new world for SMBs
During trial periods , businesses reported experiencing several benefits from using MTDcompatible software . There are an array of reasons for this , but the most apparent benefit is rooted in the fact that MTD-compatible software is built from the ground up to help be accurate and reliable .
The whole purpose of the software is to help get taxes right the first time – a notoriously difficult task that requires you to have confidence that the data you are reporting is accurate and not subject to time delays .
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COMPANIES CAN CENTRALLY STORE ALL THEIR DATA , WHICH REMOVES THE NEED TO SWITCH AND CHANGE BETWEEN NUMEROUS SYSTEMS .
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