Making Tax Digital is a government initiative that will require UK businesses to keep their financial records digitally and use approved software to submit information to HMRC. Whilst the programme is ostensibly designed to make it easier and more efficient for business owners to manage their tax affairs, its key purpose is actually to reduce tax return ‘mistakes’ – accidental or otherwise! – that cause the Treasury to lose out on tax.
Making Tax Digital is being rolled out in stages, with some businesses already taking part in pilot versions for submitting Income Tax and VAT returns using the new service. The compulsory deadline for most VAT-registered customers to start using Making Tax Digital is 1 April 2019 – so if you’re not already prepared, or preparing, now’s the time to make a start! (Mandatory use of the service for other taxes has been deferred until April 2020).
As part of the new system, all accounts software providers have been obliged to make changes to how they operate. This means that if you use an application such as Sage, QuickBooks or Xero, you’ll need to upgrade your licence to one of the new versions that’s government-approved for Making Tax Digital submissions. (Even if you currently submit your VAT returns online, you’ll still be affected as the HMRC VAT return web portal will close on 1 April 2019.)
Unfortunately, this requirement has caused some less scrupulous IT support companies to take advantage of the situation. We recently worked with a client who needed to upgrade their license and naturally contacted their IT support organisation to ask for help. The company uses Sage which was working perfectly well on a Windows server. However, this particular version of Windows Server is not supported by the new version of Sage software.
So, what did their IT support provider do? They quoted for a brand new Windows server – at the cost of thousands of pounds. As you’d expect, our client wasn’t too happy about this, so they gave Jalapeno Business Services a call.
We reviewed the situation and recommended that, instead of a whole new server, the client simply purchased new hardware which sits alongside the existing server solely to host Sage data services and accounts. The client accepted our proposals and we went ahead with supplying and installing the hardware.
Whilst our client is now fully-prepared for the introduction of Making Tax Digital, they also have the benefit of Sage running faster than it was before. And all at around a third of the cost of a new Windows Server!
What to do about Making Tax Digital
If you’re not sure where to start with Making Tax Digital, don’t worry. As a first port of call, speak to your accountant about which deadline applies to you. It’s then a good idea to get in touch with your accounting software provider for advice on the best package to upgrade to (there are always a range of options based on the size and type of your business, and your tax and accounting requirements). They should also be able to tell you whether your current server and operating system can support it.
If it looks like this could be problematic, get in touch with Jalapeno. Our experienced engineers will look at your current hardware set-up and advise on the best and most cost-effective options for making sure your new accounting package will support it. If you like, we can even carry out a full, FREE systems audit and recommend other changes that will help you work more efficiently and productively in the future.
Contact Jalapeno Business Services
If you’d like to know more about Making Tax Digital, speak to your accountant or visit the HMRC website.