In a recent survey, VAT technology firm Avalara found that 59% of companies didn’t understand HMRC’s upcoming Making Tax Digital initiative and how it would affect their business. From April 2019, the government plans to turn the HMRC into one of the most digitally advanced tax administrations in the world – Making Tax Digital is about bringing the tax system into the digital age, saving businesses time, and in the long run – money. However, 54% of businesses are completely unprepared for this digitisation.
Under the new system every UK VAT-registered business will be required to submit their VAT returns digitally to HMRC, without any manual intervention, but as it stands 63% of respondents are currently completing their VAT return manually.
Richard Asquith, VP Global Indirect Tax, Avalara says “We estimate more than five million businesses will need to make the change to digital accounting over the next year. 2019 will come around like tomorrow morning, for large enterprises. You can’t escape it, and if you get it wrong there will be significant penalties, so it’s important that all businesses – large and small – start thinking about the changeover now.”
Businesses will have the whole of the 2018/2019 financial year to prepare for, and manage, the changeover, in line with the government’s guidelines.