Digital tax deadline

Many businesses seem unaware that, as of 6 April, more than a million small and medium-sized enterprises (SMEs) will be affected by the UK’s new Making Tax Digital (MTD) scheme.

MTD requires all businesses registered for VAT and turning over more than £85,000 a year to begin filing their VAT returns using accounting software that complies with HM Revenue & Customs’ (HMRC) specifications.

According to HMRC, businesses using MTD software should help it to reduce costs, improve accuracy and battle against non-compliance and outright fraud. Meanwhile, the advent of new technology promises greater efficiency for businesses and less time spent on admin.

However, there have been numerous difficulties with the initiative, and the House of Lords’ Economic Affairs Committee, with the support of a number of small business owners, has been campaigning for a delay to the launch of the new system.

One major failure has been a lack of publicity, with many small businesses still in the dark about their responsibilities.

Moreover, while it promised to do so when first announcing MTD, HMRC has failed to find a software provider that is prepared to offer a free package that will enable small businesses to comply without having to pay.

The Revenue has published research suggesting that the new system will cost firms only £70 a year. However, this figure has been disputed by many critics who believe it to be far too low.