How to prepare your company for Making Tax Digital

2 min read

Digital recordsMandatory

Compatible softwareRequired

Prepare earlyNot at deadline

Step 1: Know what applies to you

MTD for VAT already applies to all VAT-registered businesses. MTD for corporation tax is on the way. Map which obligations hit you and when, so nothing takes you by surprise.

Step 2: Get compliant software

Move to HMRC-recognised software that keeps digital records and files through its API. If you use spreadsheets, add bridging software to maintain the digital link. Choosing well now — see choosing accounting software — saves a scramble later.

Step 3: Fix your digital links

Data must flow between systems without manual re-keying. Audit where you currently copy figures by hand — a spreadsheet into a return, one system into another — and replace those steps with proper digital links.

Step 4: Get your bookkeeping current

MTD rewards businesses whose records are already up to date and punishes those that leave everything to quarter end. Build the habit of regular reconciliation and coding now, so digital filing is effortless.

Step 5: Reap the wider benefit

Current digital records give you real-time management accounts, faster returns and better cash visibility. If preparing means investing in systems, that is a cost with a genuine return.

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Frequently asked questions

What do I need to do for Making Tax Digital?

Keep digital records, use HMRC-compatible software, and ensure data flows between systems via digital links rather than manual re-keying. MTD for VAT already applies to all VAT-registered businesses; corporation tax is coming.

Can I keep using spreadsheets under MTD?

Yes, if they connect to HMRC through bridging software and the data flows via digital links rather than being typed in by hand. A compliant spreadsheet plus bridging tool meets the requirements.

When should I prepare for MTD for corporation tax?

Before it becomes mandatory, not at the deadline. Getting compliant software and current digital records in place early makes the transition painless and hands you better management information in the meantime.