As of 1st April 2019, all businesses with a taxable turnover above the VAT Threshold will be required by law to use the Making Tax Digital service to keep their records digitally. This will mean the utilisation of software to submit their returns.
The government is determined to become a global leader in digital tax administration, and while it’s a colossal challenge with varying impact on businesses, there can be little doubt that in the long term this is a good thing for business and a good thing for the government.
1. Up to date financials boosts buyer confidence
Having been involved in literally thousands of business sales, from one-person operations through to corporates, there is a consistent theme in which businesses sell for the best price and in the shortest time; those with well prepared and clean financial detail.
The Making Tax Digital initiative will have a positive impact on future business owners looking to exit their venture. Currently, the single biggest reason a buyer does not pursue
Too many small businesses still rely on paperwork and excel to manage their financials. Often a last-minute dash to the accountant with their records once a year means there is rarely a clean snapshot of the business’ performance other than at this one occasion – which in turn means a buyer is left waiting for information to perform the due diligence required prior to purchasing a business.
Making Tax Digital should ensure that most businesses are forced into maintaining their bookkeeping, which in turn will make due diligence much easier and quicker for buyers.
2. With clean financials comes easier borrowing
Once a business buyer has done their own due diligence on an opportunity, often the next hurdle to overcome is funding the venture.
Over recent years, there have been some significant advances in commercial lending opportunities, in
Once a buyer has made the move to buy a business, the biggest reason for a deal breakdown is the lack of funding available. This isn’t always because a lender doesn’t want to lend, more often it’s down to the lack of quality financial information
When selling a small business in particular, it’s not acceptable to simply pull a profit and loss from your accounting software at any point in time and declare this as a true picture. When buyers perform due diligence on your financials, they will be put off by any errors which affect the reality of the trading position.
With Making Tax Digital, business owners will be far more likely to keep clean and up to date records, which carry
For many business owners, the introduction of Making Tax Digital brings with it an element of further red tape and challenge, but it will, undoubtedly, also offer some incentives. In particular, forcing business owners to unknowingly contribute
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