VAT returns will need to be filed online from April 2019, but research suggests that around 400,000 companies are still not aware of the change.
Some 1.2m businesses with taxable turnover of more than £85,000 will have to use the new digital filing system under ambitious plans from HM Revenue & Customs.
The new system has been called Making Tax Digital (MTD), but according to a report from the Institute of Chartered Accountants in England and Wales, just 40% of eligible businesses have even heard of the new policy.
The report explained: “HMRC is alone in its confidence that all 1m businesses will be ready for Making Tax Digital for VAT. They have underestimated the time for research, planning, training and system changes that some businesses will need.”
The challenges facing SMEs
It’s feared that the changes could have a significant impact on smaller companies, due to concerns over “scarce resources”.
HMRC has a responsibility to support small companies with the implementation of the change but has been accused of neglecting this duty.
The report emphasised: “The government and HMRC must start listening to small businesses. Otherwise the burdens on small businesses may outweigh any potential benefits.”
It’s been suggested that free software could be particularly helpful for small businesses struggling with digital returns.
HMRC have provided some resources on its website. These include:
- A new HMRC VAT Notice
- A page on gov.uk that provides a list of software developers
- A communication pack to provide stakeholders with information to support businesses and agents to prepare for MTD
If you’re concerned about the impact digital tax returns might have on your business, we offer free advice. Just call 0161 907 4044, or contact us on [email protected]