Nearly two thirds of businesses (64%) say that Making Tax Digital is a good idea but that they need more support with their plans ahead of the deadline of April 1st 2019 for VAT, according to new research from KPMG.
Making Tax Digital is a key part of the government’s plans to make it easier and more effective for individuals and businesses to get their tax right and keep on top of their affairs.
From 1st April 2019, most VAT-registered businesses above the threshold of £85k will have to keep digital records and submit VAT returns using compatible software (a small percentage of businesses with more complex needs are deferred to October 1st 2019). After a soft-landing period of a year, a further requirement for digital links throughout the VAT return process, or a digital audit trail, will be required until the deadline of 31 March 2020.
As part of the research, 1000 businesses were asked which statement best described their attitude to Making Tax Digital and the 2019 deadline to comply with the new VAT legislation.
The results showed that:
Chris Downing, Tax Partner at KPMG said: “With just over a month to go until the deadline, it’s worrying to see that almost two thirds of businesses say that they need more support and are still in the process of working out what they need to do. This could potentially be both costly and time-consuming, depending on the changes that need to be made.
“Although 98% of VAT registered businesses already file VAT returns electronically, Making Tax Digital (MTD) will involve significant changes to their existing processes. For example, keeping digital records, maintaining a digital audit trail of all business transactions, and implementing new software to submit their VAT returns digitally.
“Once businesses have made those changes, then they also need to think about the flexibility of their systems and processes to meet potential future requirements under MTD. HMRC are seeking to become the most digitally advanced tax administration in the world. We are likely to see provisions for income tax and corporation tax further down the line.”
NOTES TO EDITORS
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 16,300 partners and staff. The UK firm recorded a revenue of £2.338 billion in the year ended 30 September 2018. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 154 countries and has 200,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
© 2020 KPMG LLP, a UK limited liability partnership, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.