The arrival of the United Kingdom’s new and automated tax system brought shock and amusement to the business and taxation community. It is said that this action is made by the government of the United Kingdom with the desire to absolutely replace the long-standing tax return by the year 2020.
Moreover, according to Her Majesty’s Revenue and Customs or the HMRC, a non-ministerial department of the UK Government, the major goal of the new tax system is to make the UK’s tax administration more effective, more efficient, and easier for taxpayers.
The said and newly-introduced tax system is introduced as Making Tax Digital. Thus, what is Making Tax Digital? What are the positive contributions it delivers to UK businesses? Read and find out.
- Offers absolute chance of viewing tax information
Unlike in the traditional tax system of the United Kingdom, the Making Tax Digital expands the chance of the taxpayers of viewing or monitoring their tax information. Taxpayers’ digital account provides an actual view of their liabilities anytime.
With the MTD, taxpayers will no longer have to wait until the end of the year to know how much they owe – which is very different from that of the traditional system.
- An unparalleled storage convenience
In the traditional system, taxpayers, accountants or agents are bombarded with too much paperwork when the schedule of annual tax return is fast approaching. In another angle of this kind of scenario, it’s formidable to deal with.
But with the MTD, there will be an unparalleled storage convenience available. Which means that all the financial and/or tax details will be kept in one system from where you can access it easily.
- The new tax system is made easier with the use of bridging software
Most taxpayers, accountants, and agents thought that complying with their tax responsibilities under the UK’s new tax system is like threading a needle in the dark.
Where in fact, there are accounting software developers carefully and devotedly working with the HM Revenue and Customs. These accounting software developers are the providers of bridging software.
The bridging software is an app or software that will be used by taxpayers where they can store and input their tax records. Each of the bridging software may possibly contain different features given that they’re produced by different accounting software companies.
- Lessens the possibility and occurrence of errors
With the use of special features from the MTD-compliant bridging software, taxpayers, accountants, and agents will now easily detect certain errors made during the entire process.
This is a great way of saving time, effort and going through paper receipt one by one. The easier to track down errors, the lesser the hustle and eradicates additional work to do.
- Boosts accuracy in the tax system
Since there will be an accounting app or bridging software to help taxpayers comply with their tax obligations, enhanced accuracy in the tax system is highly expected.
Like what has been stated in the previous key point, the bridging software spots errors which result in a boosted precision.
- Taxpayers will be up-to-date regarding their tax obligation status
The new and digitised tax system will make sure that taxpayers will be well-informed concerning the status of their tax duties. This will be an excellent factor because taxpayers will less likely miss the due of meeting tax obligations as well as the possibility of facing lawsuits or government charges.
- Greatly reduces tons of paperwork
The Making Tax Digital will eventually require each taxpayer to switch to digital form. Taxpayers should know that the very essence of accepting the MTD with their open arms is that it reduces tons of paperwork related to tax duties.
When the annual tax return is fast approaching, surely, the taxpayers, accountants, and agents are facing piles of paperwork to do only to meet the deadline. But with MTD, complying with the due date is made faster and easier since it will be done digitally.
- A milestone to a notable development
There’s a simple and most visible advantage of having the MTD in the UK in this generation. It conveys that the UK government is trying to adopt the use of technology which is a major trend nowadays.
Also, having the tax system switched to the digital form leads to a notable development. Since it can be a nudge to the business world to learn about the use of technology and find the deeper benefits it can give to society.
- Taxpayers will be digitally notified and reminded by the HMRC
One more benefit of switching to the MTD is that taxpayers will be automatically notified and/or reminded by the HM Revenue and Customs concerning their tax records. This will not only save some time but also lessens the workload of the people assigned to do the tasks.
Conclusion:
There are so much more to learn and know about the United Kingdom’s Making Tax Digital. With the rise of the MTD in the UK’s taxation community, it’s indeed a remarkable action to consider by many.
Whether some may be a bit confused and shocked about the arrival of the new tax system, there’s a great hope that the MTD will soon bring the UK’s dream to reality – the dream of being included as one of the most progressive tax administrations known in the world.
AUTHOR BIO:
Kath Ramirez embraced the dream of being a writer since she was in 4th grade. She took it seriously and she’s now a graduate of AB Journalism and a current writer to Australian and United Kingdom-based companies. Aside from writing, Kath also keeps herself busy spending time with her family, cherishing the role of a mom to 3 dogs and a puppy, reading random books, and diving into the world of photography. She’s not even a pro to whatever she’s engaged into right now, but one thing she knows, she’s happy and that’s more than enough.
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