So it’s no real surprise that they would like to see HMRC further delay the programme’s roll-out.
BCC research, carried out with US tax software group Avalara, shows:
- 24 per cent of firms have never heard of Making Tax Digital, which comes into effect next April for VAT.
- Only 10 per cent know “a lot of details” about the switch to digital.
- Two-thirds (66 per cent) know it only by name or some details about it.
Maintain digital records
All VAT registered businesses will have to maintain digital records for VAT and submit their returns digitally from April 2019. That’s just days after the UK leaves the EU to add to the administrative ‘challenge’.
According to BCC, which speaks up for thousands of businesses across the UK: “Of those that are aware of the change, a quarter have made no preparations at all. This is a concern as MTD will require VAT registered firms to have MTD compatible software in place that can create a VAT return and connect to HMRC systems via an Application Programming Interface (API). This is a much more complex process for businesses than the current online process of manual completion of VAT returns.
“Of those firms that are aware of MTD, just 6 per cent of businesses have contacted HMRC for advice (including online services, webinars, or via their telephone services), compared with 51 per cent who have spoken to an accountant.”
Breathing space to engage
The BCC reckons a delay would give HMRC the breathing space to engage with businesses.
BCC economics chief Mike Spicer says: “The government’s aim to modernise the UK’s tax system is admirable, but in view of low business awareness and the impending challenges of Brexit, it would make sense for HMRC to delay the implementation of Making Tax Digital in order to get this change right.
“We are concerned that far too many firms still aren’t clear on what Making Tax Digital is, or what it means for their operations. With just months to go before the deadline, these knowledge gaps could make the timeline for change unworkable for many firms.
“Ministers must face up to the reality of the pressures facing HMRC and delay the introduction of Making Tax Digital for all businesses for the next financial year. This would allow the Revenue to focus its immediate attention on supporting businesses through the Brexit process, which must be a key priority.
A simpler and more efficient system
“When Making Tax Digital is implemented, the acid test will be whether it ultimately creates a simpler and more efficient tax system, or yet more onerous administrative burdens that stifle the growth of UK firms.”
Richard Asquith, of Avalara, says: “Making Tax Digital will affect 2.6 million businesses. It is the biggest overhaul in VAT obligations in decades. Approximately 25 per cent of businesses are still using manual or spreadsheet record keeping, which falls foul of HRMC’s new requirements.
“It is still not clear how they can become compliant without more education plus investment in compliance accounting packages. To date, HMRC have remained confident that they can cope with MTD and Brexit; although 29 other efficiency projects have had to be cancelled or delayed in preparation of the UK leaving the EU in March 2019.”
New education programme for Ireland accountants
Ireland’s biggest accountancy body, Chartered Accountants Ireland, is launching a new education programme for its 6,665 students.
It aims seeks to tackle changing market and employer needs, anticipate future skills requirements and put additional supports in place for its student body.
The programme will be available to chartered accountants Ireland students from October 2018 and represents the largest single reform of the institute’s education offering in more than a decade.