A recent survey conducted by our team has found that a shocking number of business owners aren't prepared for HMRC's introduction of Making Tax Digital (also known as MTD) in April 2019.
The focused survey of 55 respondents found that not only are business owners not on top of things, but that many accountants haven’t informed them of the subsequent changes. A whopping 54.5% of business owners had heard of the name Making Tax Digital but don't know how it affects them, with 25.5% having never heard of the term.
Worryingly, 69.1% of respondents hadn't yet been informed of the changes by their accountant, with only 23.6% confident that they'd been told of it.
In more shocking news, 83.6% of those surveyed have yet to receive any correspondence from HMRC regarding the implementation of MTD suggesting that HMRC itself is failing to inform its customers of these key changes. Understandably given the lack of information provided, of those surveyed, just over 50% have admitted to worries about how the changes may affect their business.
Making Tax Digital is a new HMRC initiative that is set to be implemented from 1 April 2019. It requires VAT registered business above the threshold of £85k to keep digital records and to submit their VAT returns using compatible accounting software.
While many businesses already do their returns online and digitally, some still use more traditional means of bookkeeping and accounting. This is a drive by HMRC to level the playing field and ensure that everyone submits their tax returns in the most efficient way. For those companies yet to embrace the digital future, it's going to require substantial changes to how they conduct their returns.
The thinking behind this huge change is that it will make the tax system run more efficiently for both businesses and the HMRC. With a mission to counteract fraudulent transactions and to circumvent any issues with inaccuracies, it should also streamline the process for responsible business owners. By being able to upload your returns online, there's never any risk of misplaced papers or documents.
Further implementation of MTD such as including those who pay income and corporation tax is planned, but currently on hold until April 2020 at the earliest. In the long term though, it should prove beneficial to bringing both the UK tax system and many businesses into the 21st century.
For now though, while companies are left uninformed of the changes, there could be considerable issues when the changes are put in place next year. According to an ONS survey from March 2018, about 2.67 million businesses are registered for VAT and/or PAYE so that's a huge number of people affected by the new way of doing things.
With such pivotal changes coming soon for all business owners, now is the perfect time for businesses to consider changing how they conduct their accountancy. We offer the perfect modern alternative to the old days of having to regularly physically deposit large piles of papers and documents to one's accountant.
We pride ourselves on our hassle-free interface. You simply upload your documents to the Mazuma app (or choose to send them via Freepost), and we do the rest. Being able to upload your documents is a particular help for sole traders who may be working between multiple different locations and constantly on the move. There's never any need to be digging around for expense receipts from weeks gone by. You can get straight to the point.
Throughout the year, our team keeps track of your bookkeeping, VAT, payroll, accounts, and tax payments. You simply receive an estimated tax bill, management accounts, and tailored advice every month.
At the end of the year, we complete your tax returns and year end accounts without any additional input from you. It's as simple as that, as well as fully compliant with the Making Tax Digital changes implemented by HMRC. Prices start at £25+ VAT per month.
Get in touch with us today for more information on our services or to receive a personalised quotation.