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Are you ready for Making Tax Digital?

Despite the efforts of HMRC and software-approved companies to promote the impending arrival of MTD, research has shown that many SMEs are still far from prepared. In fact, one-fifth of these businesses remain entirely unaware of the new legislation and how it will affect them:

  • 25% of SMEs have taken all the necessary steps and are compliant
  • 82% are aware of MTD but have taken no steps
  • 24% have admitted to not yet believing they are compliant
  • 15% are still keeping paper receipts and have not yet moved online. 

The research has also shown a huge shift in attitude towards MTD, with over half of businesses believing that it will have a positive impact on their business.

At the beginning of March, HMRC reported just under 30,000 businesses had signed up, a figure which has more than doubled, while the rate of daily signings has risen from 2,000 to 3,000 a day.

Theresa Middleton, HMRC’s director of the Making Tax Digital for business programme, said: ‘There are over 220 software products for businesses to choose from at a range of prices, including free ones, offering different levels of functionality.

Most businesses above the VAT threshold have to start keeping their records digitally and sending their VAT return to HMRC direct from their software for VAT periods starting on or after 1 April.

However, an HMRC spokesperson emphasised that the April 1st staging date is not ‘a cliff edge’. They explained that businesses will join as and when it is right for their VAT period and the first businesses to be mandated to file through MTD will not have to do so until August.

Those already using software will need to ensure it is Making Tax Digital-compatible then sign up to the new service and authorise their software for MTD.

HMRC says it recognises that businesses will require time to become familiar with the new requirements of Making Tax Digital, and during the first year of mandation, will not issue filing or record keeping penalties where businesses are doing their best to comply. However, sanctions will remain possible in cases of deliberate non-compliance, and in order to safeguard VAT revenue.

Anyone who is already exempt from online filing of VAT will remain so under Making Tax Digital.

For more information or help regarding Making Tax Digital please email mail@moco.co.uk