VAT and tax specialists at Loughton accountancy firm Haslers are concerned that few businesses are ready for one of the most significant changes to taxation in the last seven decades as the deadline rapidly approaches.
There are just a few weeks left until Making Tax Digital (MTD) is introduced on 1 April 2019. The new recording and reporting requirements for VAT will require VAT-registered businesses turning over £85,000 or more to maintain records and submit quarterly returns digitally.
In order to do this, they must ideally use ‘functional compatible software’, such as Sage or Xero, an API-enabled spreadsheet or a traditional spreadsheet and a bridging software to link with HM Revenue & Customs (HMRC).
However, anecdotal evidence and the most recent HMRC data suggests there are still hundreds of businesses across the South East, Essex and London who do not have the necessary software or processes in place for MTD.
Paul Reynolds, Tax Partner at Haslers Chartered Accountants, said: “The lack of communication regarding these changes from the Government has been somewhat lacklustre and therefore we suspect that there will be a number of businesses out there who may not be aware of these imminent changes or may not have the correct procedures in place to comply.
“It is imperative that any business owner who is within the VAT threshold seeks immediate advice if they are unsure of whether they are suitably prepared, so as not to suffer potential tax penalties in future.”
The initial rollout of MTD focuses solely on VAT, but Haslers have warned that the Government intends to expand the requirements to other areas of taxation from 2020 at the earliest.
“The software currently on offer to businesses goes far beyond just complying with the rules,” explained Paul. “And can be a vital tool in monitoring the financial health of a business and allow management teams to gain useful insights to aid with decision making.”