More than half of business owners lack knowledge about Making Tax Digital, with many more failing to be made aware of it by their accountant, says online accountants Mazuma after a survey.
Making Tax Digital is a key HMRC initiative set to launch in April this year, and compulsory for VAT-registered companies above the turnover threshold of £85k. Despite the importance of the change, few business owners know how it will affect them.
The survey revealed that 54.5% of business owners feel that they don’t know much about what Making Tax Digital is, with 69.1% not having been informed of the forthcoming changes by their accountant. 83.6% of those surveyed have yet to receive any correspondence from HMRC regarding MTD’s implementation. 50.9% of business owners and traders have also admitted to worries about how the changes will affect their business.
Making Tax Digital is designed to make the UK tax system run more effectively for tax payers. From 1 April 2019, it requires companies to keep digital records and submit VAT returns using compatible accounting software.
Future implementation of MTD, including for those who pay income and corporation tax, has been placed on hold until April 2020. It’s a key government initiative in a bid to cut down on fraudulent behaviour as well as make filing a tax return simpler for most businesses.
According to an ONS survey in March 2018 about 2.67 million businesses are registered for VAT and/or PAYE, which means a considerable number of people will be impacted by the changes.
Despite that, there’s a considerable lack of knowledge of what it will actually mean for firms, with some accountants failing to keep their clients informed.
Lucy Cohen, MD at Mazuma Accountants, said: “These results are really worrying as they show that accountants across the UK haven’t properly prepared their clients for the tax changing coming in April 2019.”
”With these pivotal changes coming for all business owners, now is the perfect time to consider changing how they conduct their accountancy.”