Business groups have called on the government to delay the introduction of a wide-ranging new tax regime – after it was found that a quarter of UK firms have never heard of it.
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The British Chambers of Commerce are pushing for a delay in the introduction of Making Tax Digital, a controversial set of new rules and processes that will govern the way small businesses and self-employed people deal with HMRC.
Making Tax Digital criticism
The government says Making Tax Digital (MTD) will make it easier for individuals and businesses to keep on top of their tax affairs, and that the scheme is key to its plans to streamline and digitise the tax system.
But businesses and industry groups have raised concerns about MTD since its conception. In 2017, the government caved to pressure over its plans to introduce quarterly tax returns, an initiative which has now been delayed and may yet be scrapped altogether.
“Widespread lack of awareness”
Making Tax Digital is now set to be phased in from April 2019, beginning with a new regime for VAT reporting. At that point, VAT-registered businesses with a turnover that exceeds the VAT threshold (£85,000) will be required to keep digital records, and submit VAT returns only using MTD-compatible digital systems.
But the British Chambers of Commerce survey, which gathered responses from 1,100 businesses, found a “widespread lack of awareness among business communities about the switch to a new digitised system.”
The survey found that 24 per cent of firms have no knowledge of MTD whatsoever, while a further 66 per cent either had only basic knowledge of it, or knew it just by name.
Even among businesses aware of the scheme, very few are preparing for it. According to the report, just one in four of those firms who know “a lot of details” about MTD have made plans for its implementation.
Making Tax Digital “must be delayed”
Commenting on the report, the British Chambers of Commerce director of economics and research Mike Spicer said: “We are concerned that far too many firms still aren’t clear on what Making Tax Digital is, or what it means for their operations. With just months to go before the deadline, these knowledge gaps could make the timeline for change unworkable for many firms.
“Ministers must face up to the reality of the pressures facing HMRC and delay the introduction of Making Tax Digital for all businesses for the next financial year. This would allow the Revenue to focus its immediate attention on supporting businesses through the Brexit process, which must be a key priority.”