Tens of thousands of firms woefully unprepared for Making Tax Digital, leading accountant warns

Peter Taaffe, managing partner of Liverpool city centre-based BWM, has sounded the alarm after just 4% of firms had signed up for a pilot of the Government’s Making Tax Digital. Tony McDonough reports

Peter Taaffe
Peter Taaffe, managing partner of accountancy firm BWM

 

Tens of thousands of businesses across Liverpool city region are woefully unprepared for one of the biggest upheavals in business taxation in decades, a leading accountant is warning.

Peter Taaffe, managing partner of Liverpool city centre-based BWM, says news that just 4% of firms in the UK had signed up for a pilot of the Government’s Making Tax Digital (MTD) scheme raised fears in his profession that the small business sector was just weeks away from chaos.

From April 1, which is less than six weeks away, MTD will require firms that turn over more than £85,000 to file their VAT returns online with HMRC via MTD compatible digital software. This means using accounting software such as cloud-based products QuickBooks Online and Xero or upgrading traditional desktop accounting software so it can link digitally, for example the Sage50 Cloud version. Spreadsheets can still be used but require the use of a HMRC approved bridging software link.  Last October the Government launched a pilot scheme and invited more than 500,000 businesses to take part. However, just 20,000, around 4%, took up the offer.

There are more than 65,000 registered businesses in Merseyside – more than 11,000 new enterprises were set up last area alone – and Mr Taaffe says this means tens of thousands of local businesses may be unprepared for the full rollout of MTD.

He said: “At BWM we have invested heavily in new technology and have been preparing our clients for the introduction of MTD, but these latest figures are alarming. If the desperately poor take-up of the pilot is an indication of the preparedness of businesses for this change then we could be facing months, or even years, of chaos – even assuming that HMRC’s end will be able to cope and be ready to go.

“The Government has said that some 3m of the smallest enterprises, as well as landlords, will be able to move onto digital tax filing ‘at a pace that is right for them’ – but there are still major question over whether the current timetable is viable.

“What complicates the picture even more is that the introduction of MTD will come just three days after the UK is due to leave the European Union. I dread to think what the implications would be if a hard Brexit were to come together with the launch of MTD.”

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