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From 1 April most VAT registered businesses with turnover above £85,000 will have to file VAT returns through new Making Tax Digital software, yet research conducted by Kreston Reeves suggests that not only are business unprepared many have not heard of the Making Tax Digital programme.
Kreston Reeves surveyed 530 privately-owned businesses and reported, at the end of 2018, preparedness and understanding of the government’s Making Tax Digital programme.
Just 65% of businesses surveyed said they are aware of the Making Tax Digital deadline. 15% of businesses said they had heard of Making Tax Digital but were not aware of the 1 April deadline and, more worryingly, 19% had not heard of the changes at all.
Making Tax Digital is a flagship programme for the government as it seeks to make it easier for businesses and individuals to manage their tax affairs. The 1 April deadline for VAT returns marks the first milestone in the Making Tax Digital roll-out.
Emma Chesson, Head of Online Services at Kreston Reeves said: “Making Tax Digital will require VAT returns to be filed by compliant software, such as Quickbooks or Xero, yet 47% of the businesses we surveyed do not use or do not know if they use compliant software. Business are, however confident, with 73% saying they will be ready by 1 April deadline.”
Businesses were also asked whether their accountant or finance team were ready for the Making Tax Digital deadline? Just 57% of businesses said their finance team or accountant is ready. 14% know that their finance team is not ready with 29% saying they just don’t know.
Emma says: “The government and HMRC will have its hands particularly full at the end of March with the UK’s departure from the EU and it had been rumoured that Making Tax Digital could be delayed.
“But HMRC confirmed that it will continue with the 1 April albeit with a soft landing. That is not, however, an excuse for failing to prepare or for the late filing of VAT returns.”
Making Tax Digital Key Facts
• MTD is applicable from the first VAT period starting on or after 1 April 2019;
• These businesses will remain in the MTD regime even if their turnover subsequently falls below the VAT threshold;
• If you are under the threshold you can opt in to MTD voluntarily, although once you are in you cannot come out of the regime unless you deregister for VAT;
• For those under the threshold that do not opt in to MTD they can continue to file VAT returns through the HMRC portal;
• Manual record keeping is not compliant;
• If you are near the threshold you need to keep an eye on your turnover, if you trip the limit you will fall into the regime;
• The VAT return itself is not changing, the frequency of submission and payment dates will remain the same;
• Eligibility criteria for special VAT schemes will not change; and
• The same concessions that are currently available will remain, although you must apply for any exemption from HMRC for example on grounds of religion, disability, age or remoteness of location.
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