Recent research suggests that a significant number of small business owners in the UK still manually write down expenses and keep receipts in a bag to manage their finances.
According to the study, more than 30 per cent of small and medium-sized enterprises (SMEs) use this method but admit that it causes mistakes, the most common being that they submit the wrong amount of taxable income to HM Revenue & Customs (HMRC).
Moving to digital filing is more important than ever before, as many businesses with an annual turnover of more than £85,000 will need to have signed up for HMRC’s Making Tax Digital (MTD) for VAT initiative and submitted their first quarterly VAT return before the 7 August filing date. If they are going to pay by direct debit, they must register by Friday 27 July.
Therefore, HMRC is reminding small firms that they need to jump on this bandwagon and join the 10,000 businesses that are registering for MTD every day. According to the taxman, more than 600,000 businesses have signed up in total so far, with some 400,000 submissions already successfully made using compatible software.
Interestingly, businesses in the agriculture sector have been one of the fastest groups to sign up to MTD, with 50 per cent of eligible businesses already registered. Others are complying more slowly, but they need to get moving, even though HMRC has said that it will not be issuing filing or record keeping penalties in the first year as long as businesses are doing their best to comply.