From April 2019, all businesses registered for Value Added Tax (VAT) will have to maintain digital records and submit their returns digitally.
Many businesses are not aware of these new requirements, a new survey suggests, despite a promotional initiative launched by HM Revenue and Customs (HMRC).
Conducted by the British Chambers of Commerce (BCC), the survey of 1073 businesses found widespread ignorance of the “Making Tax Digital” (MTD) programme, with 24% of firms claiming never to have heard of it and 66% having only a superficial awareness of what was required.
Just 10% of survey respondents told the BCC that they know “a lot of details” about the switch to the digitised tax system.
The new rules will require VAT registered firms to have MTD-compatible software in place that can create a VAT return and connect to HMRC systems via an Application Programming Interface (API).
It is, the BCC points out, a much more complex process for businesses than the current online system of manual completion of VAT returns.
Businesses are reporting low levels of satisfaction and support from HMRC, the BCC notes, although levels of direct engagement are low, with firms that are aware of MTD opting to speak to an accountant (51%) rather than tax officials (6%).
Not surprisingly, the BCC wants the introduction of Making Tax Digital to be delayed for all businesses until the start of the 2020/21 financial year.
That, it says, would give HMRC the breathing space to engage effectively with businesses, ensure that the necessary software is in place, and raise levels of awareness about the impending changes.
HMRC might lack the resources needed to deliver MTD at the same time as supporting firms through the Brexit process and day-to-day compliance issues, the BCC concludes.
Information about MTD is available at https://bit.ly/221jGUa.