KPMG reveals that UK businesses are still unprepared for MTD deadline

KPMG reveals that UK businesses are still unprepared for MTD deadline

64% have revealed to the Big Four firm that, whilst MTD is a good idea, they do not feel supported

KPMG UK has today released new statistics that have highlighted that many UK businesses still feel unprepared for the Making Tax Digital (MTD) VAT deadline.

As KPMG has stated: “Making Tax Digital is a key part of the government’s plans to make it easier and more effective for individuals and businesses to get their tax right and keep on top of their affairs.” However, how effective has the implementation period been thus far? Delays, confusion, and misunderstandings have been consistently present since MTD has been introduced.

Perhaps the most concerning percentage that KPMG research has revealed is that 64% of the 1,000 UK businesses who took part in their survey admitted that MTD is “a good idea” but more support needs to be provided ahead of the April deadline.

As is well-known at this stage, from 1 April 2019, most VAT-registered businesses above the £85,000 threshold will have to keep digital records going forward, as well as submit their VAT returns using compatible software.

For a small percentage of UK businesses in this bracket, their more complex needs have meant that HMRC has extended their deadline until 1 October 2019.

“With just over a month to go until the deadline, it’s worrying to see that almost two-thirds of businesses [are saying] that they need more support and are still in the process of working out what they need to do,” said Chris Downing, tax partner at KPMG. “This could potentially be both costly and time-consuming, depending on the changes that need to be made.”

He continued: “Although 98% of VAT-registered businesses already file VAT returns electronically, MTD will involve significant changes to their existing processes. For example, keeping digital records, maintaining a digital audit trail of all business transactions, and implementing new software to submit their VAT returns annually.”

When conducting their research looking into “which statement best described their attitude” to MTD and the 2019 deadline to comply with the new VAT legislation, KPMG concluded the following:

  • 5%: it be damaging to their business.
  • 19%: it will offer their business no benefits.
  • 12%: are supportive and also ready for the deadline.
  • 64%: believe it is a good idea, but they need more support throughout the implementation process.

Downing concluded: “Once businesses have made those changes, then they also need to think about the flexibility of their systems and processes to meet potential future requirements under MTD. HMRC are seeking to become the most digitally advanced tax administration in the world. We are likely to see provisions for income tax and corporation tax further down the line.”

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