With Making Tax Digital (MTD) set to launch on 1st April, findings have revealed that half of VAT registered smaller sized businesses do not currently have the right software in place.
The Federation of Small Businesses (FSB) found that more than a quarter (27%) of firms have not started preparing for MTD, and a further one in five (23%) have received quotes for software that will make them compliant, but are yet to purchase access to any. A small proportion (3%) say they have been part of the MTD pilot.
According to the research, small firms have said that putting MTD-compliant software in place this year will cost £564 on average.
And, the bigger the business, the higher the cost. For example, those with a turnover between £500,001 – £1 million are set to be landed with an £872 bill for MTD-compliant software on average. For firms with a turnover of more than £1 million, that figure rises to £1,019.
FSB National Chairman Mike Cherry, commented, “We’re only three weeks away from the roll-out of MTD and small businesses are clearly not prepared for it. That being the case, the Chancellor must double down on his commitment to light-touch enforcement when he delivers the Spring Statement on Wednesday. Small business owners shouldn’t be punished for honest mistakes, made more likely by a rushed HMRC roll-out.
“Promises were made that MTD compliance would be affordable. Now many firms are finding themselves on the hook for hundreds of pounds for software. At a time when small business confidence is in the doldrums – and wages, auto-enrolment contributions and business rates are rising – more costs and admin burdens are the last thing they need. They also have the small matter of Brexit to think about.
“While we’ve worked hard to ensure our members are aware of MTD, firms are finding it far more difficult, time-consuming and expensive to become compliant than was predicted by HMRC – not least because of a cumbersome registration process.
“We now need to see a full review of the MTD rollout and a guarantee that it won’t be forced on those below the VAT threshold until at least the end of this Parliament, in 2022.”
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