1.1 million businesses still yet to register for Making Tax Digital
Over a million business owners are yet to register for Making Tax Digital, a Freedom of Information request has revealed, as HMRC’s significant legislative change approaches.
Just 55, 250 companies have registered for the government’s digital tax initiative to date, despite its introduction on April 1 2019.
The numbers, gathered by cash flow service Float, showed that 13, 427 businesses have been signed-up by accounting agents, meaning the majority of businesses who registered for Making Tax Digital did so independently.
If registrations continue at the current rate, around 3, 000 per day, just 402, 000 additional businesses will have registered by 7 August the date digital VAT returns are due for submission. That’s still a minority of VAT-registered businesses.
Making Tax Digital in numbers
? 25% of small businesses have taken steps to become compliant
? 82% of small businesses have heard of it
? 24% of small businesses believe they are not yet compliant
? 15% of small businesses are still keeping paper receipts (Intuit Quickbooks)
Although 88% of VAT-registered businesses employ an external agent to handle tax affairs, the FOI request suggested that only 2% of accounting firms have registered any clients for Making Tax Digital, out of an estimated 72, 000 tax agents in the UK.
the Making Tax Digital deadline is fast approaching, and the vast majority of businesses are still unaware of what is required of them, said Colin Hewitt, Float CEO and co-founder of Float.
to fulfil MTD requirements properly, businesses need to look at registration today if they havent already embracing its adoption rather than fighting it, ” Hewitt added.
“If you haven’t reviewed your VAT process, methods and software, you should. Will your current approach enable you to submit the required VAT information through the MTD gateway?”
Read more about Making Tax Digital
Despite well-documented confusion around Making Tax Digital among small firms, Lee Murphy, the founder and CEO of bookkeeping software provider Pandle, urged business owners to ignore any scare stories.
“The vast majority of VAT-registeredbusinesses aremicro businesseswith ten or fewer employees, and most of these will be scratching their heads over what the fuss is about, ” Murphy noted.
“A large proportion of microbusinesses use one of the various popular online cloud software providers which will automatically update to meet the change. For businesses using such cloud software, there will be no additional cost, and many businesses have already been using them for quite some time to file VAT reports rather than through the HMRC portal.”
Murphy continued: “The group most affected will be those micro businesses who have remained wedded to using paper, Excel or outdated software, and there are quite a few of these too.
my message to these businesses is?you have nothing to fear from goingdigital. Such software has minimal costs, and there are even suitable free versions online. On top of this, using the simple and low-cost software designed for micro businesses will be a revelation about how things have improved in the last few years.”
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Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.