With just one month to go until the rollout of the Making Tax Digital (MTD) for VAT extension, 82% of eligible businesses that are yet to comply are still unaware of the impending deadline.
Despite an overall increase in awareness of the MTD deadline since November (from 13% to 18%), the latest survey by QuickBooks has found that less than a third (29%) of UK businesses know what they need to do to become MTD compliant and are confident of meeting the deadline. This has fallen from 38% since November, as the reality of getting up to speed approaches.
Four in five small businesses, therefore, are still unaware they need to be ready for Making Tax Digital (MTD) from April 2022. With just one month to go until the extension of MTD for VAT, 82% of small businesses said they didn't know the scheme was expanding.
QuickBooks' survey of 1,000 VAT-registered/small businesses also found 29% of UK businesses know how to become MTD compliant, down from 38% in November 2021. MTD is the Government's flagship policy to digitalise the UK's tax system to increase efficiency and reduce the risk of mistakes.
Data from the study also reveals some of the key reasons why businesses are putting off being compliant, including:
- feeling like they don’t have time (32%)
- being uncomfortable with the technology involved (30%)
- not knowing what MTD is (29%)
- needing to talk to an expert first (28%)
- being scared to make errors (26%)
On 1 April 2022, MTD for VAT will expand to include all VAT-registered businesses, regardless of turnover. Pauline Green, head of product compliance & programs at QuickBooks, said: "Going digital may seem like a daunting prospect, but it doesn't need to be - and there is plenty of help and support available for those who are yet to embark on the process, even as deadline day approaches."
For UK SMEs, failure to comply with MTD will lead to penalties on a first completed VAT return, on or after the deadline. There is plenty of help and support available for those who are yet to embark on the process, even as deadline day approaches.
Your deadlines for Making Tax Digital
April 2022 MTD for VAT
VAT-registered businesses must use recognised software to keep digital records and submit VAT to HMRC.
April 2024 MTD for Income Tax Self-Assessment
MTD for Income Tax Self-Assessment will apply for all self-employed business owners and landlords with annual income over £10,000.
April 2025 MTD for Income Tax Self-Assessment
MTD for Income Tax Self-Assessment will apply for general partnerships with an annual turnover of over £10,000.
April 2026 MTD for Corporation Tax
Making Tax Digital for Corporation Tax to be introduced at the earliest.
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