Minister makes confident statement about MTD

Minister makes confident statement about MTD

Tax policy expert Brian Palmer of AAT gives the lowdown on the government's findings on the uptake of MTD among VAT mandated companies so far - and it's looking good

Minister makes confident statement about MTD

The Financial Secretary to the Treasury (the Rt Hon) Mel Stride’s made a statement in the House of Commons, setting out the positive progress that has been made in delivering Making Tax Digital for VAT.

Business engagement is up

The level of engagement from business in Making Tax Digital so far, as revealed by Mel Stride today, has significantly increased. Over 80 percent of businesses in scope having started to prepare shows that a good number will be ready by the time of the go-live date and face minimal disruption.

Yet there’s still almost a fifth of mandated businesses, who the message needs to be communicated with, and who may not have started to prepare. So, I was reassuring to learn from the Minister that HMRC will now be ramping up its communications, using different channels to reach the remaining businesses. Who are inevitably hardest to communicate with.

HMRC report on taxpayer engagement

A the same time as the Minister was addressing the House,  HMRC published “Research Report 519 – Making Tax Digital – Monitoring Businesses’ Awareness of MTD (summary findings).”

Their research is primary quantitative research with both VAT business customers and Income Tax business customers. It has the aim of tracking and monitoring awareness of and readiness for MTD and its requirements.

In total 500 quantitative telephone interviews were conducted between 26th November and 17th December 2018.

Summary of findings:

  • Eight in ten VAT mandated businesses were aware of MTD.
  • Awareness of MTD among VAT mandated businesses was split between those aware of MTD by name (70 percent) and those unaware of the name but aware of the concept (11 percent).
  • The most common way that VAT mandated businesses had heard about MTD was through a tax agent or accountant (43 percent).
  • Nine out of ten VAT mandated businesses reported using digital record keeping in the form of software, apps or spreadsheets.
  • Eight in ten VAT mandated businesses reported that they were already using software or apps for keeping business records .
  • Businesses with a turnover of more than £1 million were more likely to use software or apps than businesses with lower turnovers.
  • Seven in ten VAT mandated businesses were using spreadsheets for keeping business records.
  • Fewer than one in ten VAT mandated businesses used only paper methods for keeping business records.
  • Eight in ten VAT mandated businesses agreed that they felt comfortable using technology to manage their finances.
  • Most VAT mandated businesses felt it would be easy to use software to keep digital records of income and expenditure (80 percent)
  • Half of VAT mandated businesses were not worried about the security of keeping records digitally.
  • Just under half of VAT mandated businesses said they planned to sign up to MTD before the April 2019.
  • 7 percent reported that they had already signed up.
  • A quarter reported they were relying on their accountant to advise on when to sign up.
  • Six in ten VAT mandated businesses did not foresee any barriers to implementing MTD (62 percent).

Income tax pilot

Toward the end of the report there are stats concerning Income Tax filers.  As they are few in number I have not floated the information out.

About the author

Brian Palmer is a tax policy adviser and a UK-leading authority on Making Tax Digital who advises, blogs and lectured extensively on this and other important area of taxation.

brian@taxpolicyadvice.com

What do you think? Does the statement indicate that software companies are scaremongering about lack of preparation for MTD, or is there still a lot of work to be done? Leave your comments below.

 

 

 

 

 

 

 

 

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