Around 346,000 small businesses could be caught out by Making Tax Digital (MTD) due to a mistaken belief that they are compliant. This comes from research conducted by QuickBooks which discovered that 86% of businesses knew about MTD. Two-thirds said that they were compliant, but in fact 46% were not compliant.
According to Chris Evans, VP and Country Manager for QuickBooks, many of the businesses were already working digitally and this led them to wrongly believe that there was nothing more that they needed to do to be compliant. As a result of their research, QuickBooks is intending to launch an MTD checker to enable businesses to check that they really are compliant.
Mr Evans said: “Some businesses who already keep digital records, but only submit their VAT returns through their existing Government Gateway account, think they are already MTD compliant. When in fact, it will no longer be acceptable for them to file future VAT returns via the government gateway.”
In fact, for a business to be compliant with MTD they need to submit their VAT returns using MTD-compatible software which will transmit to and receive data from HMRC securely without the need to manually enter data on a screen. Another reason for businesses being non-compliant is that even though they may have the required software they have not signed up for Making Tax Digital via their business account.
Mr Evans said: “SMEs need to be more open to technology and they would soon see the benefits. It is not uncommon for firms to be resistant to change. Therefore, they can be slow to adopt new ways of working, particularly when it comes to tax compliance.”