With just weeks to go before its planned introduction, new
research suggests nearly one in five businesses above the VAT
threshold still know little or nothing about Making Tax Digital,
according to the British Chambers of Commerce.
Responding to the findings, and amid the significant cost
pressures placed on business by the ongoing Brexit uncertainty,
the leading business group is reiterating its call for government
to delay the introduction of this major change, scheduled for
just a few days after the UK’s planned departure from the EU.
The results of a BCC survey of almost 1,000 firms from across the
UK, found that while levels of awareness and preparation have
increased since the previous year, businesses are still
insufficiently prepared for the incoming processes. With just
weeks to go, 19% of companies required to take part* have never
heard of Making Tax Digital or know it only by name.
The BCC study saw widespread dissatisfaction on the roll-out of
MTD, particularly from small businesses, with significant new
administrative burdens and a lack of clear guidance from HMRC
commonly reported.
Over a third (38%) of businesses have had to upgrade or source
new accounting software to prepare for the introduction of Making
Tax Digital. Businesses are also reporting that they are facing
significant costs to upgrade – unacceptable at a time when firms
are facing a myriad of upfront and Brexit related costs.
Making Tax Digital represents a significant overhaul to the UK
tax system, so the timing of its introduction just days after the
UK’s planned departure from the EU is particularly concerning for
business. Government is expecting firms to get to grips with
these tax changes while simultaneously asking them to dedicate
time and resources to prepare for all possible Brexit scenarios.
The lack of awareness, and poor communication and timing from
government, demonstrate the need to urgently delay its
introduction. Next week’s Spring Statement would be the perfect
opportunity for government to acknowledge that both its agencies
and business communities need more time to plan sufficiently for
these major changes, and announce a postponement.
Suren Thiru, Head of Economics at the British Chambers of
Commerce, said:
“The idea to modernise the UK’s tax system is a good one, but the
timing couldn’t be much worse. In the current environment, the
introduction of Making Tax Digital is an added cost and
administrative burden and there still isn’t adequate
understanding or preparation among businesses to make its rollout
a success right now.
“The political process of Brexit has stretched out the level of
uncertainty as far as possible, leaving businesses in the dark
until the eleventh hour and asking firms to prepare for all
possible scenarios. Adding such a fundamental change to their tax
practises at the same time was never going to be a recipe for
success.
“It’s time for government to acknowledge that this isn’t the
right moment to implement an overhaul of the system. A rollout of
this scale is bound to have hiccups, and HMRC’s already stretched
resources will be focused on Brexit and changes to tax and
customs process, so there is a heightened risk for confusion and
disorder.”
Ends
Notes to editors:
*VAT registered firms with a taxable turnover
above the VAT threshold (£85,000) are required to change the way
they submit returns online from 1 April 2019.
The BCC surveyed 967 respondents online between 29 January and 15
February 2019.
