Making Tax Digital for Business (MTDfB) is the government’s policy to move all business-related tax reporting online.
The stated objective of MTDfB is to make tax reporting more accurate, more reliable, and more efficient: the government wants to deliver ‘a modern, digital tax system for all businesses’.
In summary, in the short term, it means that businesses will be required to make, preserve, and then submit their existing tax records electronically.
In the years to come the tax reporting environment is likely to evolve even further and HMRC may use the MTDfB program to improve tax compliance, to exploit cloud-based accounting systems further, and to require tax reporting and payments more frequently and at a more granular level.
Organisations will need to plan, prepare and deal with these changes to ensure they remain tax compliant.