Some 65 per cent of small businesses don’t have the accounting software they need to deal with the government’s incoming tax changes.
This is according to a survey by UK200Group, which found that the majority of small businesses don’t use the tools they will need to keep up with proposed changes to the Self Assessment system.
The controversial 'Making Tax Digital' scheme will see a radical change in the way in which businesses report their earnings to HMRC from next year.
Under the proposals, firms will be required to report to the taxman on a quarterly basis, and paper returns will be scrapped for almost every Self Assessment taxpayer.
But the survey suggests that small businesses are dramatically ill-equipped to face the changes. According to the UK200Group, around 16 per cent of small firms still use the ‘shoebox’ method, under which they do not record transactions at all, but simply hand receipts to their accountant.
Meanwhile more than a quarter use spreadsheets or similar basic solutions, but will be forced to switch to full-blown bookkeeping solutions under the Making Tax Digital plans.
UK200Group’s Richard McNeilly said: “The shoebox method users will have to learn how to keep records, invest in software, and then spend time inputting the data they collect into it.
“Making Tax Digital represents the single most significant change to the UK’s system of taxation in recent times, and many of our smaller business clients are simply not ready for it.
“If the Revenue stays committed to having businesses report and pay tax digitally by 2018, small firms have only a short time to update their systems.”
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22 July 2020 • 5-minute read
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