Businesses still unaware of MTD, says ICAEW
Research by ICAEW has revealed that over 40% of businesses about to be affected by Making Tax Digital (MTD) for VAT are not yet aware of it despite the changes being mandatory for most VAT-registered businesses from April 2019.
The survey also shows that although there has been a significant increase in the number of businesses now using accounting software, a quarter of all businesses are still using a paper-based accounting system, unchanged from two years ago. Paper based records will not be permissible for MTD for VAT.
From 1 April 2019, MTD for VAT will become compulsory for VAT-registered businesses making annual taxable supplies of over £85,000. New rules will make digital record keeping for VAT compulsory as well as introducing a new requirement to file VAT returns directly from software.
Overall, 38% of all UK businesses now use accounting software for keeping their accounting records, a significant increase since 2016. This increase seems to have come from businesses which had previously been using a mixture of electronic and paper-based systems.
But only 54% of VAT-registered businesses currently use accounting software. The proportion of all businesses relying on paper-based records alone remains unchanged at 25%, including 13% of those businesses that will need to implement MTD for VAT.
One third (34%) will be relying on their accountant or tax adviser to deal with the changes for them, 20% will be buying new accounting software and 15% have done so already. However, 20% of businesses that will need to implement MTD for VAT have not yet made any preparations for it.
Anita Monteith, ICAEW Technical Tax Manager, said: “The lack of awareness among businesses about MTD is of concern and needs to be addressed: the communications on MTD do not appear to be getting through to VAT-registered businesses. It is also clear that even among businesses that are aware of MTD for VAT, many of them have not started to prepare to implement it. Given the need to review existing systems and potentially evaluate, purchase and test new software, this is a worry.”
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