A survey of small to medium-sized businesses, conducted by the Independent, has found that 11% of UK companies are unaware of new tax requirements.
As of 1st April, more than one million firms with annual taxable income over £85,000 are now required by law to submit VAT returns online. The same rules will then apply to trusts, local authorities, not-for-profits and public corporations from October. This is all part of HMRC’s new Making Tax Digital (MTD) initiative.
Of all the businesses leaders who responded to the survey, 46% of those who believed they were compliant with the new rules were found not to be, whilst 25% of compliant companies believed they were underprepared.
HMRC have been quoted to be taking a “light touch” approach towards penalties during the first year of the law’s implementation. However, this is only where they believe businesses are doing their best to comply.
Only 13% of respondents said that moving to MTD was more time consuming than they thought it would be. Showing that the government’s plans to slow the pace of mandation might be working. MTD will not be mandated for taxes other than VAT until at least April 2020. Further to this, the government announced in March that any new taxes or businesses will not have to worry about the legislation until 2020.
Businesses also need to keep digital records from the start of their accounting period using MTD-compatible software. It’s best to do some research into which software may be best for you, as many providers offer extra benefits that might be of help. The government has even provided a handy search tool to help businesses find the right MTD-compatible software to suit their needs.
Rules for MTD VAT rules can be found here.
For more information on the government’s MTD initiative and how to best prepare yourselves for the new era of digital taxation, we have great contacts in the Accountancy world who would be happy to help.