Two-thirds of small businesses yet to comply with MTD for VAT are “not confident” in meeting April deadline, study reveals

More than two-thirds of VAT-registered businesses yet to comply with Making Tax Digital (MTD) for VAT are not confident in meeting the April 2022 deadline, a major study has revealed.

The research, published by cloud accounting firm QuickBooks, comes ahead of the extension of the digital tax regime.

Under current rules, only businesses with a turnover above the VAT threshold (Currently £85,000) are required to submit quarterly digital VAT returns using MTD-compliant software – such as Sage, Xero, or QuickBooks.

But from 01 April 2022, all VAT-registered businesses, regardless of income, will be required to comply.

The latest research, however, shows that the vast majority of small businesses are not equipped with the skills or technology to submit tax returns digitally. The QuickBooks study shows:

  • 82 per cent of eligible businesses are “unaware” of the 01 April 2022 deadline
  • Just 29 per cent know what they need to do to become MTD-compliant and are confident in meeting the deadline
  • 16 per cent have “no idea what to do” and are putting off compliance
  • 32 per cent of businesses yet to comply cite “time” issues – the most common reason for non-compliance. This is followed by “being uncomfortable with technology” (30 per cent), not knowing what MTD is (29 per cent), needing to invest in external support (28 per cent), and “being scared to make errors” (26 per cent).

Commenting on the findings, Pauline Green, head of product compliance & programs at QuickBooks, said: “With just one month to go for the commencement of the MTD requirement, raising awareness of the deadline is even more important, to ensure as many businesses as possible are confident and ready ahead of 01 April.

“For UK SMEs, failure to comply with MTD will lead to penalties on a first completed VAT return, on or after the deadline. Going digital may seem like a daunting prospect, but it doesn’t need to be – and there is plenty of help and support available for those who are yet to embark on the process, even as deadline day approaches.”

For help and advice with related matters, please get in touch with our team today.

Posted in Business, Making Tax Digital.