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Only a small proportion of UK businesses have signed up to make digital tax returns – even though the first mandatory deadline is just a few months away.
The UK Government’s Making Tax Digital (MTD) initiative went live on 1 April. It means that all UK companies will eventually have to submit their tax returns online, not in print.
The first phase of MTD roll-out applies to all companies with revenues of more than £85,000 but the scheme will be extended to other businesses over the next 12 months.
Worryingly, figures released by Her Majesty’s Revenue & Customs (HMRC) reveal that only a small proportion of UK companies have signed up – either direct with the HMRC or via an accountant or other agent.
And it’s estimated only 402,000 companies will have signed up by August when the first digital quarterly VAT returns are due to be submitted. That’s less than half the 1.2 million who will be required to go digital.
It might have been assumed that most companies will go digital through their accountant but by 18 March, only 13,427 had signed up via an agent. Even agents themselves appear to be dragging their heels. Only 1,679 are signed up out of 72,000 across the UK. Just two per cent.
The HMRC has tried to make it easier by promoting free accounting software that’s available and providing a price comparison webpage to help companies decide which application to use.
Gary Jowett, from Computer & Network Consultants in Brighton, said: “The first hard deadline is fast approaching and it’s essential that all companies whom the deadline affects have good accounting software in place. Going digital may seem an unwanted chore but there are many positive aspects to it. It may help your businesses focus on migrating from old legacy software so you can modernise your accounting processes. And submitting digital tax returns should lead to more efficient accounting processes enabling your finance team to devote more time to supporting sales, marketing and customer services, to help your business grow and be more profitable.”