Small businesses in London are feeling unprepared for a looming April deadline according to research from KPMG. Around 60% of SME businesses in London say that Making Tax Digital is a good idea but that they need more support with their plans for VAT, according to research from KPMG.
Making Tax Digital is a key part of the government’s plans to make it easier and more effective for individuals and businesses to get their tax right and keep on top of their affairs.
As of 1 April 2019, most VAT-registered businesses above the threshold of £85k will have to keep digital records and submit VAT returns using compatible software (a small percentage of businesses with more complex needs are deferred to October 1st 2019). After a soft-landing period of a year, a further requirement for digital links throughout the VAT return process, or a digital audit trail, will be required until the deadline of 31 March 2020.
As part of the research, 200 London based businesses were asked which statement best described their attitude to Making Tax Digital and the 2019 deadline to comply with the new VAT legislation. The results showed that:
- 60% said that it is a good idea but that they need more support
- Almost a quarter (22%) said that it offers their business no benefit
- Just 12% were supportive and ready for the deadline
- 6% said that it would be damaging to their business
Sam Day, head of national market tax for KPMG in London said, “With the deadline looming, more than half of London businesses say that they need more support and are still in the process of working out what they need to do. This could potentially be both costly and time-consuming, depending on the changes that need to be made, particularly with the additional uncertainty of planning for Brexit in the background.
“Although 98% of VAT registered businesses already file VAT returns electronically, Making Tax Digital (MTD) will involve significant changes to their existing processes. For example, keeping digital records, maintaining a digital audit trail of all business transactions, and implementing new software to submit their VAT returns digitally.
“Once businesses have made those changes, then they also need to think about the flexibility of their systems and processes to meet potential future requirements under MTD. HMRC are seeking to become the most digitally advanced tax administration in the world. We are likely to see provisions for income tax and corporation tax further down the line.”