The Government’s flagship Making Tax Digital (MTD) project should be delayed in order to give businesses more time to prepare, the British Chambers of Commerce (BCC) has said.
The calls follow a recent survey carried out among small and medium-sized enterprises (SMEs) which found that 24 per cent of firms had never even heard of MTD, despite the fact that HM Revenue & Customs (HMRC) intends to roll out the project as mandatory for thousands of businesses within less than a year’s time.
Under HMRC’s existing timescales, MTD for VAT will be phased in from April 2019, requiring all VAT-registered businesses to begin storing and managing their accounts information using MTD-friendly software. These businesses will also be expected to send quarterly VAT information to HMRC using this software.
Shortly after the introduction of MTD for VAT, it is thought that HMRC will roll out MTD for other taxes and types of businesses, in its efforts to ‘make it easier’ for them to keep on top of their tax affairs.
But business groups feel differently, and have previously voiced concerns that the transition to MTD reporting will be no easy task for SMEs.
On top of this, a recent survey of 1,100 small businesses carried out by the BCC suggests that almost a quarter of SMEs have no knowledge of MTD whatsoever, while 66 per cent have only a ‘basic understanding’ of what MTD will require of them.
In light of these findings, the BCC is calling on HMRC to delay the project so that businesses have more time to prepare.
Mike Spicer, of the BCC, said: “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,” he warned.
“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.”