By David Owens
Hawsons Chartered Accountants
THE ICAEW has recently conducted a survey of 500 businesses to see if they are aware of the new requirements of the HMRC's Making Tax Digital (MTD) programme and how those companies plan to adapt to the impending changes. The survey took place in July 2018 and at that time only 51 per cent of VAT registered businesses that were surveyed had heard of MTD for VAT.
However, 58 per cent of the businesses who will be required to submit their VAT returns using software or an app were aware of the changes. The survey also highlighted how businesses currently keep their accounting records prior to the implementation of Making Tax Digital.
Compared to a similar survey conducted in 2016, more businesses are now using accounting software with 38 per cent of those surveyed now doing so. This compared to a figure of 25 per cent that said they used accounting software in the 2016 survey. It is reported that this increase is has arisen largely as businesses had already started to use electronic systems but were combining these with paper-based systems so possibly had knowledge of how to use accounting software before switching completely.
When looking exclusively at VAT registered businesses, over half (54 per cent) are now using accounting software whilst the proportion of businesses still using a paper-based system remained at 25 per cent of which 13 per cent of these were VAT registered businesses.
Of the 51 per cent of businesses who are aware of making Tax Digital, 75 per cent of them have made a plan for when MTD is implemented, the most common of which (34 per cent) was to leave it to their accountant or tax advisor to sort out. 20 per cent of the surveyed businesses stated that they plan to buy new accounting software and 15 per cent had already made the steps to purchase the software.
Only 20 per cent of businesses questioned said that they had not yet made any preparations for MTD.
With less than six months to go before Making Tax Digital for VAT hits UK businesses, it is concerning that so few businesses appear to have heard of the forthcoming changes, let alone have planned for them. MTD provides an opportunity for small businesses to revolutionise how they record and monitor their performance. At Hawsons we have practical expertise across the major cloud accounting providers and are hosting free demonstrations for those businesses looking to improve how they operate.
For advice on how to prepare for Making Tax Digital get in touch with David Owens on 01604 645600 or on firstname.lastname@example.org