Across the UK, the government is introducing additional tax reporting constraints under its Making Tax Digital (MTD) initiative. As MTD rolls out, many businesses are finding the changes daunting, particularly as it potentially involves adopting new technologies. But these changes also bring opportunities for businesses. Here’s what MTD means for UK businesses, and how NetSuite offers a remedy to the headache of digital MTD compliance.
Making Tax Digital (MTD) is an initiative that eliminates the manual submission of tax returns. For many UK businesses, accountants and bookkeepers, it’s radically changing the way they do their taxes. Here’s how the government explains MTD:
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 and keep on top of their affairs. HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world. Making Tax Digital is making fundamental changes to the way the tax system works – transforming tax administration so that it is more effective, efficient and easier for taxpayers to get their tax right.
In many ways digitising the tax system makes sense. After all, most businesses are already transacting and interacting online. Taking routine business tasks like record keeping and lodging taxes online is the logical next step. In fact, many businesses have already started out the journey.
Nonetheless, for many UK businesses, MTD represents a significant change in the way they manage their tax obligations. Not only must they manually re-enter their VAT returns into the HMRC’s online portal, but they also most likely have to gather transactions from across disparate business systems, separate commerce platforms or even spreadsheets.
Despite the steep learning curve, the implementation of MTD will be largely positive for UK businesses. We live increasingly digitised lives, and it’s no different in business. Cloud-based collaboration and productivity tools are becoming business staples, the rise of workforce mobility has caused device usage to skyrocket and then there’s the growing adoption of CRM, ERP solutions, HR software and plenty more.
In the digital era, relying on paper or unwieldy spreadsheets is no longer necessary. As businesses become all-digital, they can begin to eliminate inefficiency and improve processes, increase productivity and gain real-time business insight.
So, instead of thinking of MTD as just another laborious obligation, businesses can instead view MTD as an opportunity to make the move to digital, streamline their financial administration and gain a deeper understanding of their finances.
Complying with MTD doesn’t mean you must use cloud accounting software, but the right solution will make the process easier. Even better, you gain access to a range of powerful financial tools and capabilities. For example, cloud accounting and financial software, like NetSuite, help businesses keep track of financials by always knowing how much tax is owed month by month.
Let’s start with a quick overview of NetSuite, because it is more than just an MTD compliance tool. NetSuite is in fact the world's #1 cloud business software suite, encompassing ERP/Financials, CRM, and e-commerce. It’s modern and scalable and able to run all of your key back-office operations and financial business processes in the cloud.
For UK customers, NetSuite has added a simple mechanism to help businesses meet the mandatory VAT filing requirements and comes at no additional cost. Users simply enable the International Tax Reports SuiteApp to enable compliance to be supported almost instantly thanks to HMRC-compatible MTD links, HMRC VAT filing capability and audit trails.
Alongside keeping your records up to date and being seamlessly compatible with MTD, NetSuite can also integrate with a variety of third-party applications. For example, you can pull transactions straight from bank accounts, store digital copies of receipts, or use additional applications to manage timesheets. In fact, NetSuite offers a whole new world of financial functionality for UK businesses looking to take the digital leap.
Change can be uncomfortable, particularly when it involves adopting new technologies. That said, pairing MTD with a cloud-first solution like NetSuite has the potential to reduce your workload, keep closer tabs on your business's financials and support you to respond faster to opportunities and threats in your business.
The Bournemouth Digital team are here to guide you on your MTD journey. To help you get the most value from your NetSuite investment, take a look at our NetSuite capabilities here.