Making Tax Digital update

Making Tax Digital update

 

A quarter of UK firms haven’t heard of the new tax regime – Making Tax Digital. The British Chambers of Commerce and other business groups are calling for a delay to the introduction of MTD because of “widespread” confusion surrounding the new tax regime.

MTD has been widely regarded as controversial since the government first announced plans to introduce it. It’s been controversial not necessarily of what the scheme is trying to achieve but the multiple delays and changes of plans over the course of a number of years in its introduction.

 

The past and future of making tax digital

 In December 2015, the government’s vision to transform HMRC into “one of the most digitally-advanced tax administrations in the world” was revealed. By 2020, the government planned to simplify tax and to create a sole platform for all tax reporting and payment.

In 2017, the Treasury Select Committee released their findings which expressed serious concerns over costs of MTD to businesses. The report noted firms may face significant compliance costs for both updating and submitting records.

Making Tax Digital is finally set to be introduced from April 2019. Its introduction will impact VAT-registered businesses with a turnover above the VAT threshold (£85,000) as they will now need to submit VAT returns using MTD-compatible digital systems and keep digital records.

 

Why is Making Tax Digital controversial?

 While the UK government claim MTD will help people to handle their tax affairs, many businesses and organisations have expressed concern.

The British Chambers of Commerce have been vocal in their attempt to delay the new tax regime. They conducted a survey which collected responses from 1,100 businesses and found a “widespread lack of awareness among businesses communities about the switch to a new digitised system”.

Responses to the survey found 24% of firms aren’t aware of the fast-approaching MTD tax regime. Other data collected by the survey proved alarming as 66% of firms only new it by name or had basic knowledge of MTD.

According to the survey, 90% of the 1,100 that took part don’t have proper knowledge of the new tax regime. The report also suggested that the few businesses aware of MTD aren’t preparing for it – just one in four firms have made plans to implement MTD.

 

Why do people want to delay it?

 Mike Spicer, the British Chambers of Commerce director or economics and research, made the following statements on the report’s findings – “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.”

 

Do you need advice on how MTD may affect you?

 Is your firm unaware of MTD? If you don’t fully understand the new tax regime, you shouldn’t delay talking to your Smart Team accountant. We can guide you through the upcoming changes and help you understand how they may affect your businesses financial situation.

Alternatively, you may be aware of MTD but you’re worried about how you should implement it. You shouldn’t worry – Smart Team can help.

Contact Smart Team on 01202 577 500 or email us at info@yoursmartteam.co.uk for advice and support.

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