Businesses in the East of England are unprepared for new digital tax rules
PUBLISHED: 11:14 04 October 2018 | UPDATED: 11:33 04 October 2018
New research suggests that as many as 87,000 VAT-registered businesses in the East of England are unprepared for new digital taxation rules which come into force from next April.
There are close to 300,000 VAT-registered businesses in the East of England, but analysis from audit, tax and consulting firm RSM carried out by YouGov suggests that up to one third of businesses are unprepared for the new rules.
Making Tax Digital (MTD) is the Government’s ambitious plan to bring the UK’s tax system into the 21st century.
With only a few exemptions, VAT-registered businesses trading over the VAT threshold of £85,000 will be required to keep records in a digital format, ensure that the transfer or exchange of VAT information is digitally linked, and submit their VAT return information to HMRC using MTD compatible software.
Any business affected by these changes must ensure that they are using MTD compatible software by April 2019. To be ‘compatible’ the software must include an Application Programme Interface (API).
HMRC has indicated that there will be a ‘soft landing’ period between April 2019 and April 2020 during which there will be no financial penalties for record keeping failures arising from the new rules, but there must be an API from the outset, creating a link between the accounting software of the business and HMRC.
Anne Holt, VAT partner at RSM in East Anglia said: ‘Making Tax Digital is one of the biggest shake-ups in tax administration for over 20 years. But with just six months to go before the rules come into force, a worrying number of VAT-registered businesses are completely unaware of the changes.
“VAT-registered businesses really need to make the next six months count, to ensure that their software, systems and people are all ready for the change.”
To assist businesses to prepare for the change, RSM is hosting a series of workshops across the country. Further details are available at https://www.rsmuk.com/events/making-tax-digital-events.