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The government’s flagship Making Tax Digital (MTD) scheme should be delayed until 2020/21 for all taxpayers, according to the British Chambers of Commerce (BCC).
VAT-registered businesses with an annual turnover of more than £85,000 are due to be the first to go through the transition to digital accounts for reporting VAT only from April 2019.
But the BCC is calling on the government to push that date back after discovering that only one in ten UK businesses are fully aware of MTD.
The BCC polled 1,073 small firms and found 24% of business owners had never heard of MTD, while 66% had only heard of it by name and know little else.
As a result of the widespread lack of awareness of digital accounts, the BCC called on the government to delay its rollout of MTD to increase its profile and ensure suitable software is in place first.
Mike Spicer, director of economics and research at the BCC, said:
“The government’s aim to modernise the UK’s tax system is admirable, but in view of low business awareness, it would make sense for HMRC to delay the implementation of MTD to get this right.
“Far too many firms still aren’t clear on what MTD is, or what it means for their operations.
“With just months to go [before MTD is rolled out for VAT-registered businesses], 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 MTD for all businesses for the next financial year.
“When MTD is implemented, the acid test will be whether it creates a simpler and more efficient tax system or yet more onerous administrative burdens that stifle the growth of UK firm