Firms should prepare now for sweeping taxation system changes that will be introduced under the government’s Making Tax Digital (MTD) programme, a Swindon-based accountancy firm is warning.
Jon Lacey, pictured, accounts director with Regulatory Accounting, says although some of the far-reaching implementation plans have been put back, the sooner businesses get to grips with the new system the better. 
The HMRC plans to make fundamental changes to the way the tax system works under the MTD initiative and by 2020 should have moved to a fully digital system.
But many business owners are unsure what MTD means to them, said Jon, who pointed out that a recent survey revealed 43% did not even know what MTD was.
“The changes had been going to start as early as April 2017,” he said. “Although this has now been delayed, MTD has huge implications, with small businesses and the self-employed being the first to be affected.”
Jon said the most significant change for businesses under MTD will be the end of the annual tax return. By 2020, most businesses, the self-employed and landlords will be required to update HMRC quarterly via a digital tax accounting system, using approved software.
“This change means instead of saving up all the information for the annual tax return, the information is sent through quarterly and has to be done so digitally – so no more paper tax returns, except in exceptional circumstances,” he said.
“Software will need to be put in place, and businesses’ accounting systems, and their accountants, geared up for the change.”
Regulatory Accounting has been proactive in anticipating MTD and its accounting systems were set up specifically to cope with quarterly reporting.
Jon added: “We knew MTD was coming and so we have our systems in place for all our clients in order to meet the demands of quarterly reporting. Our mission is to make tax simple for our clients, and this is one way in which we achieve this goal.”
The new ‘real-time’ tax system means business people will be able to have an up-to-date view of their business tax affairs and liabilities through accessing digital accounts.
Although any tax owing won’t at this stage be required to be paid quarterly, Jon anticipates this may change in the future.
“We can see that happening somewhere down the line, but it’s not planned at this stage,” he said.
Regulatory Accounting has helped hundreds of successful people start, grow and sell their business. Its services include helping firms set up and source finance and handles their bookkeeping, accounting and taxation.
