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Businesses not ready for MTD

More than 1.1 million businesses are yet to register for Making Tax Digital, according to Float, the cash flow service for Xero, QuickBooks Online and FreeAgent.

The data, acquired via a Freedom of Information request published by HMRC, shows that only 4% of UK businesses mandated to join Making Tax Digital from 1st April have registered.

Likewise, the data suggests that only 2% of accounting firms have registered any clients for Making Tax Digital, from an estimated 72,000 tax ‘agents’ nationwide.

Float believes that many businesses are still unaware of MTD or are uncertain of what action needs to be taken to become compliant. The company argues that the MTD registration process is confusing and that HMRC has much more to do to alert businesses to the change in the law.

It also states that if businesses continue to register for MTD at their current rate (HMRC estimates 3,000 registrations per day) only 402,000 more businesses will have registered by 7th August, when the first digital quarterly VAT returns are due for submission – still a minority of VAT registered businesses.

Colin Hewitt, Float CEO and co-founder, said: “The Making Tax Digital deadline is fast approaching, and the vast majority of businesses are still unaware of what is required of them. While many businesses will have heard of MTD, they are busy running their businesses, and often rely on their accountants to communicate what they need to do.

“Sadly, many accountancy firms are still very much reactive rather than proactive, and won’t have done more than sending a few emails which will probably be sitting buried in inboxes across the country. While solutions like Xero and Quickbooks have been very proactive in telling their customers about MTD, it’s obvious from the data that businesses haven’t yet responded to the registration process required.”

Colin advises fish and chip shop owners to register today and not to see MTD as a threat or a burden, adding: “It’s an opportunity for businesses to modernise their accounting and bookkeeping practices, a task that many businesses need to do urgently anyway. Sometimes there needs to be a line in the sand, a catalyst that forces change, and MTD is exactly that.

Read our article from January all about MTD, who is required to register and how to go about it.

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