Small businesses “unprepared” for extended rollout of Making Tax Digital for VAT

Just two in 10 VAT-registered businesses yet to comply with Making Tax Digital (MTD) for VAT are “unaware” of the April 2022 deadline, a major study has revealed.

The research comes ahead of the extended rollout of the digital tax regime, which will impact all VAT-registered businesses.

Under the current scheme, 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 Xero, Sage, or QuickBooks.

But from 01 April 2022, MTD for VAT will be extended to all VAT-registered businesses, regardless of income.

The latest research, however, shows that small businesses are unprepared for the transition to digital tax.

According to QuickBooks, the cloud accounting software provider, just two in 10 (18 per cent) eligible firms are aware of the April 2022 deadline.

Less than a third (29 per cent) of businesses, meanwhile, understand what they need to do to become MTD compliant.

And when asked why they are delaying compliance, a third (32 per cent) said they “don’t have the time”, while a similar proportion (30 per cent) said they were “uncomfortable with the technology involved”.

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, Value Added Tax.