3aIT Blog

 

MoneyHMRC's "Making Tax Digital" scheme is supposed to be coming into effect from April 1st. However, the FSB has recently released a statement in which it indicates that only half of small businesses are not ready to comply with the scheme.

From April 1st, any VAT registered business with a taxible turnover above the VAT threshold is required to use the Making Tax Digital service to keep records digitally and use software to submit their tax returns. Further taxes were originally destined to be required to be submitted in a similar way from the following April. However, this requirement was quietly dropped in the written companion to the government's recent Spring statement. It is unclear when and if this will be reintroduced.

In order to achieve this, a business needs to buy or update the software needed to achieve this. As the FSB report makes clear, many have not done this yet, despite the imminent deadline. The survey suggested that this update is costing firms an average of £564 in the form of one off charges or annual subscriptions. 27 per cent have not yet started preparing for the changes, and a further 23 per cent have received quotes for software that will make them compliant but have still not purchased any.

The government have made a list of software that complies with these new requirements. According to the FSB, many firms have reported that the process has been more expensive and complex than promised. This is on top of having to deal with preparing (or not) for some still undefined version of Brexit that could (or could not) happen at any moment.

Nevertheless, despite the FSB's call for this process to be postponed until the end of this parliament, it is still government policy that all qualifying businesses must comply with the new rules in the coming days. They have promised a "light-touch" on compliance, but there's currently no definition of exactly what this means.

 

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