HMRC are driving ‘Making Tax Digital’ as the way they want to communicate – starting with VAT. The information we need to provide is the same and the deadlines won’t change, but the way that we submit the information will, and so too will the amount of information we’re required to keep.
As the software isn’t provided, it will be up to businesses to buy new software or upgrade their existing software, adding a ‘plug-in’ so that it is compatible with HMRC’s systems for uploading documents.
Some businesses will rely on agents for their tax compliance, who will be better informed. But, there are many small businesses who do not employ accountants that they can talk to about this.
Tech-savvy businesses already using accounting software will find it easier than others who are not used to accountancy software – such as sole traders in rural areas, who are more likely to use manual means of VAT reporting.
Broadband speed varies across the region, and businesses that can’t rely on a decent internet connection may find the idea of using it to do something as important as their tax pretty daunting. There are also a minority of businesses who will not be regular computer users and of course their needs could be overlooked. HMRC will consider exemptions for certain groups – including the digitally excluded – so if poor connectivity is a real issue for you, it’s worth speaking with them.
These are all additional burdens on businesses at a turbulent time. Making Tax Digital is due to come into force on the UK’s first day outside the EU – with continuing uncertainty about VAT on transactions between the UK and EU. It will be an extra concern and potentially a drain on time and money, at an already difficult time.
The advice is to plan ahead. Some members have reported receiving costly quotes – both from software companies and accountants – to comply with MTD, but our own investigations suggest there will be cheaper options out there. There are more than 20 software suppliers currently offering MTD-compatible products, so be sure to explore all of your options.
The main thing is to start to think about what is available. The HMRC website offers lots of advice. Shop around. Speak to people, speak to your accountant (if you’ve got one) and remember that there is a lot of information available.
Our members are regularly accessing the Legal Hub and Helpline for advice, and there is also the Making Tax Digital Hub available for anyone looking for more information on the FSB website.
