Is your Healthcare Practice Ready for Making Tax Digital?
In a time of rising cost pressures and patient demands, it’s not surprising that the healthcare sector needs to find new ways to save on resources.
As any GP or healthcare professional knows, the current economic climate is uncertain. There’s a huge demand for health services up and down the country and not necessarily enough time or money to meet it. Tax is a factor that every business has to take into account, and it’s especially important for the health sector where budgeting is everything and many current paper-based systems don’t lend themselves to tax planning.
Time for change
The government’s plan to bring the UK tax system into the 21st century will come into force from 1st April 2019. From then, VAT registered businesses with a turnover higher than the £85,000 threshold will have to keep their records digitally for VAT purposes, rather than traditional pen and paper methods. This will include filing quarterly VAT returns online and maintaining accurate and up-to-date financial information throughout the trading year.
Businesses will need to keep their records and prepare their VAT return using software which can communicate with HMRC using the digital Application Programming Interface (API) platform.
HMRC has published detailed requirements about what information has to be kept and supplied, as well as a list of MTD-compatible software. This list will continue to be updated as we move closer to April next year.
Many digital accounting systems are also cloud-based which have a host of advantages over traditional PC based software. These include linking to the business bank account which saves time in keying in information and the ability to scan purchase invoices so these are retained with the accounting records.
MTD for GPs
The initial change might seem daunting, especially if pen and paper is the current method of choice for recording tax. However making the switch to digital will enable surgeries to save time and money from the offset. Going digital now will give you time to choose the right system and become comfortable with its use before going live.
Having the ability to access up to date financial information will enable practices to budget soundly and enable more careful planning so VAT doesn’t become a burden. This is especially useful for an industry facing a range of financial challenges, from budget cuts to staffing issues.
Practices often make the most of financial professionals to ease the pressure of practice tax, pensions and payroll. Digital platforms will give accountants in-year access to figures and enable them to provide the most up to date and accurate advice to medical practice teams.
A digitised process will also free up a significant amount of time for stretched and in-demand practices so that delivering quality healthcare to patients can remain top of the agenda.
Contact us to talk about how Making Tax Digital will affect you and your business.