Making Tax Digital is a new Government Initiative to help recoup money lost through incorrect Tax returns and VAT mistakes. In 2014-2015, the total cost of incorrect returns amount to £3.5billion.
Since 2010 businesses have been able to file their VAT returns online, and currently 98% of business do. The new system will integrate with commercial software to ensure you can update HMRC on quarterly rather than annual basis.
The first phase focuses on business who are over the VAT threshold (£85,000) and they will need to be part of the Making Tax Digital by April 2019. Smaller business can voluntarily opt into the system at the same time.
The pilot for Making Tax Digital has already started, and a wider pilot begins in April 2018, with no business being mandated until April 2019.
The good news is it is not too late to move to a cloud accounting solution, there are plenty of companies who are offering new apps to help you submit your returns, but it is wiser to choose an established commercial software solution like QuickBooks, that has millions of users and a solid history of reporting financial data.