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Making Tax Digital Software for Businesses

The UK is putting a lot of effort to become the most digitally advanced tax administration globally with the Making Tax Digital (MTD) initiative. Making Tax Digital is one of the government’s (HMRC) plans to modernize the administration of tax and finance, enabling individuals and organization to mange and track their tax. Businesses must comply by using MTD compatible software, like Enterprise Resource Planning (ERP) systems.

Benefits of MTD for Businesses

The MTD initiative is designed to reduce tax errors through the use of digital records and real-time updates, instead of old paper records. HMRC provides extensive support to help businesses transition to these new digital mandates, including webinars, detailed guides, and direct assistance for accessibility challenges. This move not only helps better tax management and also aligns with governmental goals to enhance business productivity through digital transformation.

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Changes in Making Tax Digital

VAT Digitalization (2019)

From 1st April 2019, businesses with a turnover above £85,000 have been required to keep digital records and submit VAT returns using MTD-compatible software. Special provisions were given until 1st October 2019 for businesses with divisional VAT registration, charities, and public sector organizations to comply.

Income Tax Digitalization

Significant updates have been made to the MTD for Income Tax Self Assessment (ITSA). Originally set for 2024, the mandatory implementation has been postponed to give businesses more time to prepare. From April 2026, self-employed individuals and landlords earning above £50,000 annually must keep digital records and send quarterly updates to HMRC. This threshold will extend to those earning more than £30,000 from April 2027.

Technological Solutions to Implement MTD

Microsoft is offering MTD functionality for Dynamics 365 Finance & Supply Chain Management (Former AX/F&O) and Dynamics AX 2012 R3 is available from Q1 2019. There will be no official functionality released provided for older AX versions (Dynamics AX 2012 R2, Dynamics AX 2012 Base, Dynamics AX 2009, AX 4.0, AX 3.0), as these versions are out of mainstream support.

Support and Upgrade Options:

Our GO-ERP specialists are ready to assist users of any version of Dynamics AX or Dynamics 365 F&SCM. We will implement solutions to help your business comply with MTD requirements. This includes:

  • Customizing new functionalities to support MTD on your existing Dynamics AX system.
  • Integrating MTD-compliant add-on packages.
  • Cost-effective upgrades to the latest version of Dynamics 365 Finance & Operations and MTD functionality implementation.

For more detailed guidance on how to comply with MTD and benefit from digital tax management, businesses can consult HMRC’s page with dedicated MTD resources, Microsoft Learn page or engage with our professionals, that will guide you through the process.

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