This means that digitally compliant software will be essential for submitting a VAT return, and submission by logging onto HMRC directly will no longer be an option.
Although this is a huge challenge, that will have varying impact on businesses, there is little doubt that this is going to be a good thing for businesses in the long term. Introducing the new systems to comply will have a great advantage when it comes time to sell your business, for these reasons:
1. Having up to date accounts will boost buyer confidence
Businesses that have got well prepared and clean financial accounts always sell for the best price and in the shortest time. So many businesses still rely on paper accounts and aren't clear on how they manage their financials. A last-minute contact with the accountants with their end of year records mean that there is rarely a clean snapshot of the businesses performance and the buyer can be left waiting for this information required for the purchase.
Making Tax Digital should help to ensure that most businesses are forced into maintaining their bookkeeping and will make the process much quicker and easier for potential buyers.
2. It is easy to secure funding with clean accounts in place
Once a buyer has decided to buy a business, the biggest reason for a deal breakdown is lack of funding available. This can often be due to the lack of financial information available at a certain point in time. Although in recent years there have been big advances in commercial lending opportunities, without the right accounting records in place, this can cause a deal breakdown and a loss of sale.
Making Tax Digital will ensure that most businesses have got well-kept financial information, which is always up to date and will ensure that funding becomes much easier.
3. Buyer confidence increases when there are less mistakes present
When buyers perform an audit on the financials, the last thing they want to be faced with is any errors which may or may not affect the trading position of the business.
With Making Tax Digital, it is more likely that business owners will have clean and up to date financial records, which will have less errors and mistakes, therefore increasing buyer confidence and leading to a smoother sale of business.
To find out more about Making Tax Digital and how it will affect your business, get in touch with us today.