Business owners are wrongly relying on their accountant or tax adviser to help them prepare for Making Tax Digital (MTD), a new study has revealed.
The survey, published by the Institute of Chartered Accountants in England and Wales (ICAEW), which Grunberg is a member of, shows that more than a third (34 per cent) of businesses will be relying on their accountant to deal with HM Revenue & Customs’ (HMRC) new digital tax system.
MTD, which comes into effect from 1 April 2019, will become compulsory for VAT registered businesses making an annual taxable turnover of at least £85,000 each year.
For many, this will mean reporting and filing VAT returns on a quarterly basis using MTD-compliant accounting software.
Importantly, MTD is expected to encompass all other taxes at a later date, meaning businesses should use the years ahead to prepare themselves for the age of digital tax.
But the new survey reveals that awareness of MTD is worryingly low, despite its imminent introduction.
The report shows that more than 40 per cent of businesses about to be affected by the new digital tax system are not yet aware of it. Likewise, some 62 per cent of UK businesses are not currently using accounting software for keeping their accounting records.
Commenting on the findings, Anita Monteith, ICAEW Technical Tax Manager, said the lack of awareness among businesses about MTD is of concern and needs to be addressed.
“We continue to fully support HMRC’s ambition to increase the use of digital technology, but we are concerned that based on these results many businesses are not going to be ready for implementation in April 2019,” she said.
“The communications on MTD do not appear to be getting through to VAT registered businesses. We would like to explore with HMRC what more we as business advisers we can do to help. It is also clear that even among businesses that are aware of MTD for VAT, many of them have not started to prepare to implement it. Given the need to review existing systems and potentially evaluate, purchase and test new software, this is a worry.”
Ms Monteith added: “We want to help make MTD a success and also ensure that businesses get this right, but time is running out.”
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