We’ve all heard about the HMRC’s somewhat bold scheme to step taxes dramatically into the future, Making Tax Digital.
However, if you are anything like us you will likely have found that the literature online surrounding the topic is unsurprisingly vague. There’s plenty of talk about approved software, but how this approved software works or what using this software entails is apparently ignored.
This was quite frustrating for us as we set our sights upon offering our users an easy way to become MTD compliant. We have, however, navigating through the swathes of (largely not very useful) information and are considering several solutions for our users.
What we thought might be helpful for you all is a quick no-nonsense rundown of what this whole Digital Tax thing means:
Or get advice from the professionals: TN Accountancy
The first draft of this article I wrote got a little technical at this point, and that was frankly no fun at all. I’ve stripped out the jargon and hopefully distilled into a more crystalline format what it means for a software to be ‘HMRC approved’.
HMRC approved accountancy software needs to integrate with the HMRC’s MTD API (apologies for the many acronyms). Once they have proved that they can do this integration they go through a demonstration and approval process with the HMRC.
What this integration does is allow the software to ‘talk’ directly with the HMRC meaning that with a click of a button within the app or desktop software you are using, you will be able to submit your tax return.
The real advantage of using an application like Landlord Studio is that you can update your accounts anywhere at all with payments in, expenses out, and digitized receipts.
The idea is to reduce human error, get rid of that big accountancy task at the end of the year, and create better transparency and understanding of your tax obligations. You will simply review the accounting you’ve done as you go along, and then submit.
For most landlords, MTD isn’t something that they need to worry about yet.
However, it is coming in stages and will apply to all income tax by 2023.
Thankfully, if you are using Landlord Studio then that means you are already digitizing your taxable income and expenses. Fantastic! However, you aren’t quite there yet. As we mentioned above we are still in the process of working out the most efficient way to get our software to work with the HMRC API. We have considered looking into direct integration or failing that, integrating with a more friendly API from one of the major accountancy software like Xero or Quickbooks.
Keep your eye on this space to stay on top of our MTD news.
If you are currently required by the HMRC to submit your VAT return digitally then you will need to be using an approved accountancy software or bridging software to submit your taxes to the HMRC. https://www.tax.service.gov.uk/making-tax-digital-software
We hope you found this blog interesting! However, do note that it should not be used as a substitute for competent legal and/or other advice from a licensed professional
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