1 Million+ UK VAT-Registered Companies Still To Register With Making Tax Digital
A Freedom of Information request has revealed that with a little under a week to go to the deadline for registration, more than 1 million UK VAT-Registered Companies have still not signed up to HMRC’s Making Tax Digital (MTD) programme.
HMRC’s MTD was announced back in 2015 and requires VAT registered UK companies to keep digital records and file quarterly reports with the taxman. The first phase of the programme, MTD for VAT, is rolling out on 1st April, with the first digital quarterly VAT returns due to be submitted by 7th August.
MTD offers businesses the chance to move to an easier, more convenient, full cloud accounting solution rather than their own (often spreadsheet-based) legacy systems. For HMRC, having everything digitalised should allow them to save costs, time and resources, improve accuracy, and get revenue more quickly. HMRC says that the MTD programme should “make it easier for individuals and businesses to get their tax right and keep on top of their affairs.”
Other Taxes – Not Digital Submission Until 2020
The UK announced in July 2017 that more time would be needed before an MTD-style programme could be mandated for taxes other than VAT until at least April 2020.
Also, the government announced earlier this year that because it is focusing on support for businesses in the transition to MTD it will not be mandating Making Tax Digital for any new taxes or businesses in 2020.
The FoI request that revealed how many businesses still hadn’t registered for MTD was submitted by Float, a cashflow forecasting software company. The information in response to the FoI request showed that as of 18th March 2109 only 55,520 businesses were registered with the scheme. HMRC has since said that 70,000 business have now registered, which means that companies are registering at a rate of around 3,000 per day.
HMRC has been criticised for not contacting many companies about the changes. For example, it was revealed that as recently as last November, only 40% of companies had heard about the new programme.
What Does This Mean For Your Business?
2018 to 2019 has been a challenging year for businesses with the preparations and introduction first of GDPR, followed by the uncertainty surrounding Brexit overshadowing many other issues. It may be true to say that many businesses are reactive and are busy just keeping on top of business most of the time and in a situation like this where the communication from HMRC about MTD has been poor, it’s not surprising that many businesses have still not registered. It may also be fair to say that many accountancy firms haven’t been as proactive as they could have been in informing their customers about MTD and its deadlines.
The introduction of MTD will undoubtedly require work and time in getting figures into a new and unfamiliar digital platform, but if it makes it easier for companies to stay on top of their tax affairs into the future, this will be a good thing, not least for the exchequer.