The government's controversial Making Tax Digital proposals will cost businesses an average of £2,770 a year.
This is according to the Federation of Small Businesses, who looked at the impact of HMRC's plans for firms to complete tax returns quarterly, rather than annually.
The FSB looked at the staffing costs involved in completing the extra returns. They say businesses will spend three times as long on their reporting obligations if Making Tax Digital is introduced.
But they warns the figure could be even higher, as their research didn't include factors like installing new software and training staff to use it, or IT support.
The FSB's figures a wildly different from the estimates put forward by the government. HMRC has previously said that it believes the changes will cost businesses an average of just £280.
The Revenue expects the transitional cost to be minimal for larger businesses. In a consultation document explaining its calculation, it said: "HMRC believes that VAT-registered, medium sized and large businesses are very likely to already have good or adequate IT hardware. If anything urgent is required, this may only require a minor upgrade."
Conservative MP Andrew Tyrie, chairman of the Treasury select committee, has pushed the government for an independent assessment of both HMRC and the FSB's figures.
In a statement yesterday, Tyrie said: "There are huge differences between the FSB and HMRC about the administrative burden of Making Tax Digital.
"This is the heart of the matter. The FSB think that businesses might spend three times as much on their tax obligations as they currently do. HMRC think they will spend less time, leading to a small net saving. A comprehensive pilot should shed some light on which assumption is closer to reality."
Who do you believe? Let us know in the comments.
We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
22 June 2020 • 9-minute read
How to start a clothing business. It can be an all-consuming process but with that first sample run and customer sale comes great…
6th Floor99 Gresham StreetLondonEC2V 7NG
Sol House29 St Katherine's StreetNorthamptonNN1 2QZ
© Copyright 2021 Simply Business. All Rights Reserved. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London, EC2V 7NG.