Thousands of UK small businesses are still not prepared for important digital tax changes set to come into force within the next few months, a study has found.
The UK government has ruled that by April 2022 over one million small businesses will need to comply with incoming digital tax legislation, called Making Tax Digital (MTD). The changes — which require digital tax records uploaded online — apply to any business with less than £85,000 turnover.
Except there’s a problem: Intuit has conducted a survey and found that around 300,000 businesses are not yet compliant.
The company, which makes the QuickBooks tax software suite, found nearly half (41%) of those it surveyed have been delaying making the necessary changes to comply with MTD, most likely because of the extensive paperwork.
According to Intuit, most small business owners spend four hours per month worrying about VAT returns and some can spend up to seven hours per month.
“Tax returns are a necessary fact of life for most small businesses, but that doesn’t mean they are enjoyable. With many experiencing sleepless nights around filing their returns, it’s understandable that many are avoiding thinking about upcoming VAT legislation,” noted Pauline Green, Head of Product Compliance & Programs at QuickBooks.
“But it doesn’t have to be this way. Using digital software for VAT can actually reduce stress by automating the process, therefore minimising the time spent, improving efficiency and ensuring returns are accurate. Software also provides real-time insights into finances, helping to build better habits and financial awareness. If they prioritise becoming MTD compliant, small businesses will start to experience these benefits and eliminate tax worries – allowing them to focus on building a successful business.”
Intuit has also worked with University of Bath Professor Bas Verplanken to create a free guide for alleviating some of the stress that stems from taxes, with a focus on simple changes that can make a big difference, freeing up time for other activities.
As Verplanken says, “Successful habits form when you frequently and regularly conduct a task and protect against forgetfulness, procrastination, and even fear by making your tasks part of your daily or weekly routines. Building and adhering to these habits can minimise small businesses’ worries about their VAT returns and put them in full control of their business.”