Making Tax Digital (MTD) needs to be delayed to give uncertain businesses more time to prepare, the British Chambers of Commerce (BCC) has warned.
The calls follow a recent BCC survey, which found that 24 per cent of small and medium-sized enterprises (SMEs) had never even heard of MTD, despite the fact that HM Revenue & Customs (HMRC) intends to roll out the project for VAT-registered firms within just a few month’s time.
MTD for VAT will be phased in from as soon as April 2019 under current plans.
This will require all VAT-registered businesses to begin storing and managing their accounts information using MTD-friendly software.
Affected businesses will also be expected to send quarterly VAT reports to HMRC using this software.
Shortly after the introduction of MTD for VAT, it is thought that HMRC will roll out MTD for other taxes and types of businesses.
However, the BCC has voiced concerns that many firms are still woefully unprepared.
According to its survey of 1,100 small businesses, almost a quarter of SMEs have no knowledge of MTD whatsoever, while 66 per cent have only a ‘basic understanding’ of what MTD will require of them.
Mike Spicer, of the BCC, said that “too many firms” were still unclear about how they would be affected by MTD and what they might have to do in order to prepare,
“With just months to go before the deadline, these knowledge gaps could make the timeline for change unworkable for many firms,” he warned.
“Ministers must face up to the reality of the pressures facing HMRC and delay the introduction of Making Tax Digital for all businesses for the next financial year. This would allow the Revenue to focus its immediate attention on supporting businesses through the Brexit process, which must be a key priority.”