By the time the UK’s new tax system, Making Tax Digital went live in April 1st of 2019, the businesses with revenue above the VAT threshold of £85,000 will now be mandated to store and keep their tax record digitally with the use of MTD. And the compliance with the tax obligations will take place four times than the traditional or previous tax system.
In the year 2020, the scope of the MTD will be increased. That means that sole traders and partnerships with revenue above £10,000 will start to conform with their tax duties under the new tax system MTD.
The sudden implementation of MTD unbelievably creates debate all over UK businesses. Some show interests and some show doubt concerning the digitized tax system.
That’s why the UK government, together with the HM Revenue and Customs are both working hand-in-hand in order to meet the taxpayers’ satisfaction. In fact, the HMRC is continuously and carefully working with several accounting software developers in order to make the new tax system more tailor-fitted in the taste of the taxpayers.
The chosen accounting software developers are the providers of one of the primary tools to be used to keep the MTD running, the bridging software. Read further and know more about the said software and how it will make shifting to a digitized system much easier for taxpayers.
The Bridging Software: Brief Introduction
The bridging software is the product of the accounting software developers that connects business’ records to HM Revenue and custom’s system in MTD-compliant way. It serves as the gateway of taxpayers to comply with their tax obligations in digital format.
That means that taxpayers covered by MTD in the current time will no longer have to drown themselves with piles of paperwork. The bridging software sustains a digital link concerning stored data in spreadsheets and HM Revenue and Custom’s portal.
However, the HMRC confirmed that they’re not providing free bridging software. It’s up to the accounting software providers whether the bridging software will be free or not – the possible costing is also upon them.
The Bridging Software as Part of MTD’s Goal and Objectives
The primary objectives of MTD are to deliver a more effective, more efficient, and better tax system to taxpayers. And as stated by the HMRC, the major goal of MTD is to put the UK’s tax administration in the list of one of the most progressive tax administrations in the whole world.
With the mighty help of the bridging software, the MTD and the tax administration of the United Kingdom will be able to comply with those.
The bridging software from different accounting software companies has its own features and special offers. Taxpayers are free to choose on what bridging software to use as long as it’s MTD-compatible. Businesses in all types and sizes can find the most appropriate bridging software for them and the company.
Bridging software, MTD’s objectives, and the Relation of the Two
The stated objectives of MTD in the previous key point will possibly be attained with the bridging software by its side. With the use of bridging software, the taxpayers will more likely find MTD a better and easier system than the previous one.
The previous tax system has an old manual process that results in too much pressure and stress not only to the taxpayers themselves but as well as to the accountants, and agents. Moreover, the manual process is more prone to acquiring errors that result in repeated work or much more paperwork to handle.
However, the new tax system is far different from the traditional or the previous one. The MTD is carefully-made to effectively bring a better tax system to the taxpayers, accountants, and agents.
Since MTD is in digitized format, the errors will be detected easier and faster and there will be a boosted accuracy in the filing process.
The implementation of the MTD may seem to be an additional liability for some taxpayers. But with the bridging software to give service, eventually, the taxpayers will realize that MTD is sent to make the business life and meeting tax obligations better and faster.
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.