09 Jul What do you know about the Making Tax Digital initiative that comes into force soon?
The British Chambers of Commerce have called for the Making Tax Digital (MTD) initiative to be delayed until the start of the 2020-21 financial year, after research revealed that 24% of firms have never heard of the initiative. But you should make sure you are covered now sooner, rather than later.
Research conducted by the BCC and Avalara gathered recently responses from over 1,100 UK businesses. In addition to the 24% who had never heard of Making Tax Digital (MTD), 66% knew the project only by name or by some details about it.
The BCC said that this demonstrated a
“widespread lack of awareness among business communities about the switch to a digitised tax system”.
Just one in ten firms knew “a lot of details” about the digital tax plans, but of those who were aware, 25% had made no preparations ahead of the implementation date of April 2019. The research also revealed that 6% of businesses who were aware have contacted HMRC for advice through online services, webinars or by telephone, compared to 51% who have spoken to an accountant.
If your business is not prepared, speak to us today, we can help.
Too many firms still aren’t clear on what Making Tax Digital is
Mike Spicer, director of economics and research at the BCC, has said: “We are concerned that far too many firms still aren’t clear on what Making Tax Digital is, or what it means for their operations. With just months to go before the deadline, these knowledge gaps could make the timeline for change unworkable for many firms.
“Ministers must face up to the reality of the pressures facing HMRC and delay the introduction of Making Tax Digital for all businesses for the next financial year. This would allow the Revenue to focus its immediate attention on supporting businesses through the Brexit process, which must be a key priority.
“When Making Tax Digital is implemented, the acid test will be whether it ultimately creates a simpler and more efficient tax system, or yet more onerous administrative burdens that stifle the growth of UK firms.”
Richard Asquith, VP of global indirect tax at Avalara, has said:
“Making Tax Digital will affect 2.6m businesses. It is the biggest overhaul in VAT obligations in decades. Approximately 25% of businesses are still using manual or spreadsheet record keeping, which falls foul of HRMC’s new requirements. It is still not clear how they can become compliant without more education plus investment in compliance accounting packages. To date, HMRC have remained confident that they can cope with MTD and Brexit; although 29 other efficiency projects have had to be cancelled or delayed in preparation of the UK leaving the EU in March 2019.”
A spokesperson from Sage said:
“The UK cannot sit back any longer; we absolutely need to be in the driving seat and stand-up as a leader in the digital arena. Just this week we welcomed the government’s £2m fund to help small businesses adopt technology to help boost their productivity. Making Tax Digital is one of the biggest opportunities the UK has to use technology to cut back on unnecessary business admin – further delays and ambiguity is not what our country’s businesses need.
What is required under Making Tax Digital?
Under the MTD for businesses initiative, from April 2019, businesses registered for VAT that have turnover above the VAT registrations threshold of £85,000 will be required to keep digital records for VAT purposes and submit VAT returns to HMRC through MTD compatible software.
Some useful links :
XERO – Making Tax Digital – Tax is changing for businesses, accountants and bookkeepers. Learn why digital finance management is becoming mandatory and make it work for you before the deadline.
GOV.UK – Making Tax Digital Policy Papers – There is widespread agreement that Making Tax Digital for Business is the right approach for the future. How HMRC is making it easier for individuals and businesses to get their tax right and keep on top of their tax affairs papers, links and further info.
If you are not keeping digital records or are unsure whether your accountant is, contact us and we can have a look at your business and advise accordingly. You can either fill out the contact form above, email firstname.lastname@example.org or call us on 01254 583515. We look forward to speaking to you.