MTD: just 12% of decision makers feel ‘very prepared’

MTD: just 12% of decision makers feel 'very prepared'

A YouGov poll has shown that businesses do not feel prepared for the change Making Tax Digital brings, with 57% saying they felt ‘unprepared’ and only 12% said they were ‘very prepared’.

MTD: just 12% of decision makers feel ‘very prepared’

The deadline for the government initiative, Making Tax Digital (MTD), has now passed, but there are still concerns over how many businesses have adapted to the change.

As of August 7, MTD is now mandatory for all businesses with a turnover of £85,000 or more, removing the option to do it on paper.

According to a YouGov poll, businesses did not feel prepared for the change Making Tax Digital brings, with 57% saying they felt ‘unprepared’ and only 12% said they were ‘very prepared’.

The poll also found that 28% of small companies are worried that they will have to spend more money on tax affairs, while 12% of bosses say that they have not even heard of the new initiative, despite it coming in effect for most businesses on April 1.

Daniel Fallows, Director at Gorilla Accounting, has warned that companies not on-top of MTD could face charges, saying: “Those not on top of transitioning from paper-based processes to digital ones, will now miss the deadline which could result in them incurring a default surcharge, which will be in place until April 2021.

“After this period, the surcharge will be replaced by points-based late-submission penalties and late payment penalties.  Any submissions must now be made through a 3rd party software such as Freeagent and can no longer be done through the HMRC website where a MTD submission is required.”

The YouGov poll surveyed 502 decision makers in the UK with up to nine employees, and showed that many are still unenthusiastic about MTD, and question whether it will actually make things easier or more efficient.

However, over half (54%) of senior decision makers who have already started to submit their taxes electronically say they think that MTD will make accounting and tax reporting easier for their business, although one third (31%) disagree.

Only 6% of small businesses think that MTD will reduce stress, including those yet to move to the new system, while only 23% think they will have less paperwork to do. 19% feel it will make managing their tax affairs easier and more efficient.

Despite the scheme’s overall goal to make tax more efficient, there are limitations to MTD which relies on the internet and technology. As Fallows says: “One of the disadvantages for some individuals is slow internet connectivity. Only one in four rural homes have access to broadband speeds of over 10 megabytes per second, and therefore it is easy to see how some may struggle with the new online system.

“However, the biggest concern for us is that there is still confusion among contractors and businesses with regards to what is expected of them following the rule change. Seeking professional advice is the best way to ensure compliance with the new system and avoid any late penalties.”

The majority of businesses who have moved already said that they did not need to pay for extra to adapt to MTD, be it new staff or software. Only 2% said that they needed a new bookkeeper, while 27% purchased new software. 10% introduced new training and 11% set aside contingency funds.

The poll suggests businesses did not feel prepared for the change Making Tax Digital brings, with 57% saying they felt ‘unprepared’ and only 12% said they were ‘very prepared’.

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