New research suggests that the UK’s SMEs could benefit to the tune of as much as £57 billion over the next five years because of digital productivity improvements associated with HM Revenue & Customs’ (HMRC) Making Tax Digital (MTD) initiative.
The report by research firm, Volterra Partners, anticipates a ‘digital snowball’ effect from the launch of MTD for VAT on 1 April this year that will have a major impact on the productivity of SMEs.
The report follows the logic that businesses will benefit from improved cash flow and HR processes, with time freed up to concentrate on growth through sales, marketing and training.
If MTD is restricted only to VAT, the report’s authors expect a total benefit to UK SMEs of around £46 billion. However, if as is planned, the Government extends MTD to other taxes in future years, the benefit could be worth as much as £57 billion.
Chris Evans, VP and UK Country Manager at Intuit QuickBooks, which commissioned the research, said: “Today’s report highlights that a digital-led approach will be transformational for small businesses, who are the backbone of the UK economy.
“For those businesses, the transition to digital will not be without stumbling blocks. However, it presents a huge opportunity to streamline operations, drive efficiencies and simplify tax. It will enhance cashflow management and allow them to get paid faster and access capital to grow, powering prosperity across the UK.”
Making Tax Digital for VAT is quite literally just around the corner. By as early as April, thousands of businesses will need to be fully compliant with MTD for VAT, which is why it is important to take action now.
To find out more about Macalvins’ specialist services relating to MTD for VAT and how we can help support the growth of your business, please get in touch.