Making Tax Digital: Is my SME ready?  

posted by 1 year ago in News
Making Tax Digital: Is my SME ready?  

SMEs in the UK are having to take drastic action to work alongside HRMC’s new taxing policies.

During 2017, we will see HM Revenue Custom’s enforce quarterly taxing. A survey, conducted by UK200Group found that 65% of their members which are over 150 independent accountancy and law firms do not use the services and software needed to maintain their accounts.

To add, the new tax changes announced during the final Spring Budget are according to Moore Stephens “not in line with the priorities of small business” which he found via a pre-Budget survey which also revealed that the income tax reduction is a high priority for companies.

ICAS have claimed that the budget for small businesses is currently a “mixed bag” however, they are supporting chancellor, Philip Hammond’s decision of Making Tax Digital for those under the VAT level.

Chief executive of ICAS, Anton Colella said;

“ICAS supports the overall objectives of Making Tax Digital, but has long been concerned with the unrealistic timescale for the project. This shows a chancellor who has listened.”

The survey also revealed that just 27% of 150,000 SMEs involved actually use computers to manage their bookkeeping while 16% do not keep a record of their business transactions and instead pass it on to their accountant to deal with their tax returns.

Richard McNeily, Chair of the UK200Group Digitalization Taskforce comments;

“Making Tax Digital represents the single-most significant change to the UK’s system of taxation in recent times, and many of our smaller business clients are simply not ready for it.”

The group has expressed its concern over the added pressures to tax reporting which will effect the smaller businesses of the UK because they are more likely to have a financial director rather than software needed to take care of taxing.

They have announced new regulations which will be held off until HMRC fulfils a consultation on how the future of tax reporting is panning out and the technology needed has been trialled throughout a full compliance cycle.

Laura Thomas, head of business finance at Businesscomparison.com explains;

“This is a very ambitious challenge for HMRC, I expect they will be faced with some resistance from smaller businesses, however, with much in business becoming more and more digital it seems only natural that expectation for reporting will also become digital.

It is worth mentioning that to support this transition HMRC has committed to making free software available to the ‘majority’ of small businesses and is also including some exemptions for other smaller traders such as landlords with turnover under £10,000. So is it the right move?  Probably, yes, we need to start future proofing.  Will it be an easy move? Not a chance!”

Businesscomparison.com offers a free Tax & VAT loans comparison service, don’t let your business suffer!