More than 80% of impacted businesses unaware of upcoming VAT legislation deadline
One month to go until April 1st deadline for the commencement of Making Tax Digital (MTD), but 82% of businesses who need to comply are still unaware
Less than a third (29%) know what they need to do and are confident of meeting the deadline – back in November, 38% were confident
A better understanding of digital tools on offer would help – 39% SMB owners felt they need more expert tech support throughout the process
London, UK - 1 March 2022
With just one month to go until the commencement of Making Tax Digital (MTD) deadline, which will require businesses to keep all VAT records in a digital format, a new study from Intuit QuickBooks, the global technology platform, has found that 82% of eligible businesses are still unaware of the impending deadline.
Despite an overall increase in awareness of the MTD deadline since November (from 13% to 18%), less than a third (29%) of UK businesses know what they need to do to become MTD compliant and are confident of meeting the deadline. This has fallen from 38% since November, as the reality of getting up to speed approaches.
VAT-registered businesses with an annual turnover below £85,000 will need to have implemented MTD from 1st April 2022. Worryingly, the proportion of businesses that have “no idea” what to do and are putting off becoming compliant has doubled from 8% in November to 16%.
With the deadline weeks away, and digital tax an important topic for so many UK SMBs, it will be one of the main topics of discussion at QuickBooks Connect (9-10th March), with workshops available for small businesses needing assistance on getting compliant.
Pauline Green, Head of Product Compliance & Programs at QuickBooks, says:
“Our study showed that expert tech support is absolutely vital for small businesses, including the desire for support from a professional accountant. What’s more, using digital software for VAT can be invaluable, as it alleviates many of the concerns that businesses are faced with – even where to start. With just one month to go for the commencement of the MTD requirement, raising awareness of the deadline is even more important, to ensure as many businesses as possible are confident and ready ahead of April 1st.”
Time & lack of confidence deterring businesses from compliance
Data from the study also reveals some of the key reasons why businesses are putting off being compliant, including:
Feeling like they don’t have time (32%)
Being uncomfortable with the technology involved (30%)
Not knowing what MTD is (29%)
Needing to talk to an expert first (28%)
Being scared to make errors (26%)
It’s clear that more small business owners need expert support to nail compliance. On average, respondents spend 4.5 hours a month worrying about their VAT returns, so gaining a better understanding of the technologies on offer to help could greatly reduce this.
SMB owners felt equally strongly about their need for more expert tech support throughout the process (39%) such as from a professional accountant, gaining greater awareness of when the deadline is (38%), and being clearer on what they needed to do (37%).
Pauline continued: “For UK SMBs, failure to comply with MTD will lead to penalties on a first completed VAT return, on or after the deadline. Going digital may seem like a daunting prospect, but it doesn’t need to be – and there is plenty of help and support available for those who are yet to embark on the process, even as deadline day approaches.”
To help small business owners, QuickBooks partnered with Bas Verplanken, Emeritus Professor of Social Psychology at the University of Bath. He developed a guide for small business owners – based on the social psychology of effectively creating new habits - to help them keep on top of their VAT returns, minimise stress around compliance, and strengthen their business as a result. The guide can be accessed here.
Find out more about QuickBooks’s research here.
Sources
Independent research was conducted by Censuswide on behalf of Intuit QuickBooks with a representative sample of 1000 small business owners that are VAT- registered, with an annual turnover of less than £85,000. Research was conducted between 10-15 February 2022.
Disclaimer
This information is intended to outline our general product direction, but represents no obligation and should not be relied on in making a purchasing decision. Additional terms, conditions and fees may apply with certain features and functionality. Eligibility criteria may apply. Product offers, features, and functionality are subject to change without notice.
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