The Economic Affairs Committee has warned the HMRC that small businesses in the UK ‘could pay a heavy price’ for Making Tax Digital for VAT (MTD for VAT).
What is MTD for VAT?
If you haven’t heard of it, you need to get up to speed quickly because as the ICAEW website reports:
From April 2019, VAT registered businesses with a turnover above the £85k threshold will:
- Need to maintain their accounting records digitally either using accounting software or suitable spreadsheets. Paper records will not be enough to satisfy legislative requirements.
- Submit their tax returns digitally using the HMRC API. Xero, Sage and other platforms already allow you to do this.
What does the report say?
The Committee’s new report stated that HMRC has ‘failed to adequately support small businesses’ ahead of the introduction of MTD for VAT.
They state that many businesses ‘will not be ready’ for the introduction of MTD for VAT. They ave also stated that it remains ‘unconvinced’ in regard to HMRC’s claims that the new digital system will ‘narrow the tax gap’.
‘HMRC [is] not listening to small businesses, while offering a six-month deferral to many in the public sector.’
Is VAT changing?
It is important to realise that no changes are being made to underlying VAT rules, just the way a business must record and account for them, so the change in itself will not change your tax amount.
If however you have a large paper based system and must now convert it to a digital one then this will bring a significant cost in both software and retraining of staff.
How MCC Accountants can help with your digital tax
For all of those out there who are struggling then please give MCC Accountants a call. We are experts in small business accounting and regularly use all of the main software packages. We can help guide you in your path to digital tax accounting. give us a call on 0161 707 1500 or use out contact form to drop us a line.