A new report outlines that start-ups and small businesses stand to gain the most benefit from the next roll out of Making Tax Digital.
Analysis from small business support platform Enterprise Nation and think tank The Entrepreneurs’ Network, supported by accounting software firm Intuit, found more than half of businesses with less than £20,000 in annual turnover said the use of digital accounting software led them to adopting other productivity-boosting technologies.
Inflation coupled with frozen allowances and thresholds (known as fiscal drag) means more businesses will now be dragged into the tax return bracket. The report highlighted that not only does this add further complexity, it also acts as a brake on entrepreneurship with all the negative consequences that will have for the economy and society at large.
Making Tax Simple argues for a simplification of the tax system and urges the Government to leverage digital tools to benefit small businesses and the economy.
Emma Jones, CBE, founder and CEO of Enterprise Nation, said: “Government initiatives like Making Tax Digital are already saving VAT-registered small businesses time on their tax returns by reducing their administrative workload.
“But this report shows there are benefits to be had by bringing smaller firms below the VAT threshold into the scheme. That’s because it not only saves time taken working on tax returns, but also has a role to play in helping companies to embrace technology.
“The reality is that the UK’s complex tax system, compared to other nations, is a disincentive to enterprise. If we simplify this, we can remove barriers to entrepreneurship, allow entrepreneurs to dedicate more time to their businesses, enhance competition and ultimately benefit society.”