Small businesses are 56% more likely to overpay their taxes due to mistakes when filing for VAT than they are to be fined for not paying enough, according to research from QuickBooks.
The research, which surveyed 500 UK small businesses, found a low level of confidence among business owners when it comes of filing their VAT, with just 1-in-4 (27%) saying they are confident that they filed their VAT accurately.
It also found that SME owners spend an average of 86 minutes manually checking each VAT return before filing to HMRC.
Chris Evans, VP and country manager at Intuit QuickBooks UK said: “There is a big move towards digital in the UK, in part driven by the new MTD legislation, but also due to the increased advantages technology can offer a business.
“I was shocked to find [SMEs] were spending such a large amount of time checking figures manually ahead of VAT submissions and still didn’t feel confident about their final return.”
More than half of small business owners (51%) said that they have made mistakes when completing their VAT return, which can result in paying HMRC more than is required.
The government’s Making Tax Digital (MTD) legislation means that at least 50% of VAT registered businesses will be required to change the way they file VAT tax returns, which will result in many having to change their back-office operations to remain compliant, or face surcharges.
The survey also found that 35% of SME owners feel relief when they have filed their tax return, but 19% still worry they have missed something and 18% are anxious they have made a mistake.
The government’s MTD scheme is meant to make tax easier and less stressful for businesses while making the whole process more efficient, but despite the deadline for businesses with a turnover of £85,000 or more having passed on 7 August 2019, a number of businesses remain unprepared.
According to a YouGov poll, businesses did not feel prepared for the change MTD brings, with 57% saying they felt ‘unprepared’ and only 12% said they were ‘very prepared’.