The end-to-end Making Tax Digital solution
As HMRC’s Making Tax Digital programme goes live, we’re here to help you meet the challenges and make the most of the opportunities that digitalisation offers.
Making Tax Digital (MTD)
Make the most of the opportunity for growth and embrace digitalisation with CCH OneClick.
Making Tax Digital is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right. MTD is the most significant change to the UK tax system since the introduction of self-assessment.
According to HMRC, its ambition is to become one of the most digitally advanced, effective and efficient tax administrations in the world. MTD aims to encourage organisations to truly embrace digitalisation to minimise potential human error and ensure HMRC is maximising the amount of tax it can raise.
The first phase of Making Tax Digital goes live in April 2019 when VAT registered businesses over the threshold will have to submit data directly to HMRC via compliant software.
Wolters Kluwer has delivered a VAT Filing solution that allows you to maintain your current VAT processes as closely as possible. CCH OneClick is predominately built for accountancy practices and their clients to embrace digitalisation and MTD however, it can be easily implemented for a company as well.
We have created this MTD zone to help you and your practice prepare for MTD.
Making Tax Digital Video Series: Navigating the change
Our Making Tax Digital experts, Product Director Wendy Rowe and Senior Product Manager Phil Thornton can help you navigate the transition to a world with Making Tax Digital for VAT in this series of videos.
How to make the transition: What you need to consider, the questions you need to ask and the processes you need to review.
What is changing? MTD will change how practices operate – we look at what is changing and how to prepare for those changes.
CCH OneClick – a complete MTD toolset: Much more than a MTD for VAT filing solution. Explore how you can futureproof your business with CCH OneClick.
Making the most of MTD: Embrace digitalisation, boost efficiency and customer support – we explore the new services and support you can offer.
Keeping choice at the heart of our MTD development: Follow our journey to give practices the choice to maintain many of their existing processes.
From April 2019, HMRC’s online interface, where 87% of VAT submissions are currently manually entered, will no longer be available to those over the VAT threshold.
Currently, only 13% of accountants use other tools such as bookkeeping software to submit the relevant VAT data to HMRC. To comply with the MTD process and avoid facing the non-compliance penalties, businesses with a turnover above the VAT threshold of £85,000 will need to embrace digitalisation. HMRC’s final VAT notice is a valuable resource to refer to. Click here to view the notice.
Future-proof your software
Wolters Kluwer has developed an end-to-end solution that enables you to maintain many of your current processes.
Accountants can analyse data from various systems including online bookkeeping software all in one central place. If your current VAT preparation is completed within a spreadsheet, this process can continue with CCH OneClick.
Once you are content that all the data is correct and ready to be submitted then you will be able to upload your spreadsheet through our MTD toolset using CCH OneClick. The software will find all the data necessary for the nine-box VAT requirement and submit it directly to HMRC’s website.
CCH OneClick provides you with an end-to-end Making Tax Digital (MTD) solution.
Get prepared with our checklist
The time to engage and plan for the changes to VAT in MTD is now. Adopt this step-by-step process to help you make the transition stress-free.
One way to get ready for when MTD will go live is to be part of HMRC’s pilot. Businesses who are VAT-registered can voluntarily choose to submit their VAT returns via the new system.
Making Tax Digital will fundamentally transform the accountancy industry. Accountants and clients will need to prepare for the rollout of the second phase of MTD and for how certain tax actions will be completely changed.
From April 2020, businesses will be required to keep digital records and submit quarterly updates online to HMRC
(subject to confirmation by the government).
Quarterly reporting is a key element of MTD for Income Tax. It will change the current process of submitting information to HMRC once a year, making it a task that will have to be performed five times per year (including the end of period submission).
A significant advantage to the taxpayer is that this will give them as close to a real-time view of their tax position as possible. A significant challenge to the accountant, however, is doing the same work they complete annually, quarterly, without increasing cost to client or slowing efficiency. While the deadline for quarterly reporting seems far from now, the change is so significant, the earlier you can prepare for it, the better.
End-of-year and end-of-period submissions
Individuals and businesses will need to send an end-of-period submission for their businesses and property income.
This end-of-year submission will need to consider the quarterly updates and any final necessary adjustments. This is often referred to as the ‘fifth quarter’.
This submission not only needs to take account of all the business data from the quarterly reporting, you will also need to digitally collect any other income, from multiple sources (such as banks), and make sure your client validates the information.
Income Tax pilot
Sole traders who only gain income from one source can voluntarily register for the Income Tax pilot.
Instead of filing a Self-Assessment tax return, they would be requested to keep their business records digitally and send Income Tax updates to HMRC. This will mean that these individuals will see an estimate of how much tax they might owe as the system is updated, rather than waiting until the end of the tax year.
HMRC are still in consultation processes with thought leaders in the industry around MTD for Income Tax. We will keep you informed with Income Tax developments as they unfold.
Digital record keeping
The MTD initiative aims to push the accountancy industry to truly embrace digitalisation, improve efficiency and reduce human error in tax submissions.
HMRC estimates that £9bn is lost in tax due to genuine human errors when preparing tax calculations. One of the ways in which these errors can be eradicated is to improve how efficiently financial records are prepared. Many businesses currently keep manual records of invoices, receipts and cash takings. Digital record keeping will be a fundamental part of reducing the opportunity for error.
Once you have begun to move your manual bookkeeping clients to a digital system, it is a good opportunity to look at your internal processes to see if you can improve how efficiently your practice operates.
The accountant of today needs tools and effective workflows that will transform their services and unlock time for growth and new revenue. One option is to consider online tools to save time and increase efficiency.
Spreadsheets and MTD
A key component of MTD is digital record keeping and migrating businesses and individuals over to using bookkeeping services to improve the accuracy of their records. Where does that leave us with spreadsheets?
In July 2018, HMRC released its final addendum to the VAT notice which states that spreadsheets can continue to be used. Spreadsheets are for the time being a form of digital record keeping. The continued use of spreadsheets should allow the transition to MTD to be more straightforward, with advisors able to maintain their current VAT calculations they have today within spreadsheets. HMRCs final VAT notice is a valuable resource to refer to. Click here to view the notice.
Get the latest on digital record keeping
Keep up to date with the latest developments on digital record keeping as you prepare for MTD.
Making Tax Digital will fundamentally change how your practice operates, how regularly you’ll need to collect data and how you’ll communicate with your clients.
MTD will require a new set of best practices that are MTD compliant which you will need to communicate to your customers. It is an opportunity to automate processes, improve efficiencies as well as grow an advisory offering for your clients.
Develop a communication plan ahead of MTD for VAT
Start your communication plan by segmenting your clients. Start with those who will be impacted by the first phase of MTD.
The transition to MTD for VAT will inevitably mean changes to how you and your clients will work together and how you’ll monitor the relevant financial data.
Now that you have a clear vision of what changes you will need to adopt, the time to embrace the changes to MTD for VAT is now. Download this checklist and transition plan to help you through your programme to digitalisation.
“We have been working with CCH OneClick as part of the MTD pilot and have been hugely impressed with how easy it was to get up and running. I was particularly impressed with how straight forward the actual process of filing a VAT return was using CCH OneClick. Added to this, the dashboards within CCH OneClick allow me to monitor the progress of our VAT clients and having access to information such as the Digital VAT Account means CCH OneClick provides me with a complete Making Tax Digital for VAT toolset.”
Tony Hyde, IT Manager, Newby Castleman