ICAEW has 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 they plan to adapt to the changes. The survey took place in July 2018 and at that time only 51% of VAT registered businesses that were surveyed had heard of MTD for VAT.
However, 58% 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% of those surveyed saying this. This compared to a figure of 25% that said they used accounting software in the 2016 survey. It is reported that this increase is from businesses that had already started to use electronic systems but were combining these with paper-based systems so possibly had knowledge of how to use the software before switching completely.
When looking exclusively at VAT registered businesses, over half (54%) are now using accounting software whilst the proportion of businesses still using a paper-based system remained at 25% of which 13% of these were VAT registered businesses.
Of the 51% of businesses who are aware of making Tax Digital, 75% of them have made a plan for when MTD is implemented the most common of which (34%) was to leave it to their accountant or tax advisor to sort out. 20% of the surveyed businesses stated that they plan to buy new accounting software and 15% had already made the steps to purchase the software.
Only 20% of businesses questioned said that they had not yet made any preparations for MTD.
The full report can be read here: https://www.icaew.com/technical/tax/making-tax-digital/mtd-articles/mtd-awareness-and-planning-business-survey-results
Paul Wormald, Partner at Hawsons Doncaster office commented “With less than 6 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 one of our advisors here.
Or sign-up to one of our Making Tax Digital Workshops that are happening every month in all three of our offices by clicking here.