Close to half of all businesses in the UK have no plans whatsoever in place to adjust their accounting practices in response to incoming legislation associated with the government’s ‘Making Tax Digital’ initiative.
According to the accounting and advisory firm Moore Stephens, there is a very widespread lack of both awareness and preparedness when it comes to Making Tax Digital.
Indeed, the research suggests that while 48 per cent of companies don’t have a plan for dealing with the incoming rules, around 36 per cent are completely unfamiliar with the issue.
The findings of the recent enquiries by Moore Stephens could be viewed as surprising or even quite shocking given that April 2019 marks the deadline for Making Tax Digital compliance.
The incoming regime will oblige businesses to digitise their VAT records and deal directly with HMRC via electronic means with regard to any associated issues.
Around one third of companies have indicated that they are already prepared for the digitisation of their VAT-related dealings with HMRC but that leaves a great many businesses without the same level of preparedness.
To complicate matters, the April deadline for Making Tax Digital falls right around the same time as the UK is scheduled to withdraw from the European Union, which is presenting businesses and their bosses with uncertainty around a wide variety of pertinent issues.
Moore Stephens has suggested that some companies may have been distracted from addressing their readiness for Making Tax Digital by their concerns about Brexit and particularly the potential consequences of the UK pulling out of the EU without an official withdrawal deal.
Only 25 per cent of the people polled recently on the subject said that they have a firm plan in place for coping with Brexit.
“Many businesses simply lack the time and resources to prepare for Brexit and Making Tax Digital at the same time,” commented Nick Warner, Moore Stephens’ VAT partner.
“Complying with current VAT regulations is a major challenge for many businesses, particularly those with international trade or operations. The added task of meeting the requirements of Making Tax Digital is only adding to existing stresses.”