What does it mean for my business?
Under Making Tax Digital, businesses (including sole traders) have to send quarterly updates to HMRC with their income and expenditure. This has to be done through cloud accounting software. HMRC will be able to access this digitally stored information.
The software you choose must use application programme interfaces (APIs) for returns to be filed to ensure it is MTD-compliant. HMRC has approved KashFlow as MTD compliant software.
This means that any offline or desktop-based accounting software that cannot communicate with HMRC will render your business non-MTD compliant and risk your business being hit with penalties and fines.