A study carried out for HMRC has shown smaller businesses believe Making Tax Digital doesn't apply to them.
While businesses were aware of MTD for VAT by name, many still don't understand the process of the scheme and whether their business needs to comply.
As part of a second survey, 26% of businesses said they hadn't linked their MTD-compatible software with HMRC, showing a misunderstanding of compliance for MTD VAT.
Although all businesses polled are required to use MTD-compatible software, the results vary in understanding of the process:
- 36% said MTD would affect their business
- 29% said they were compliant
- 28% believed MTD would not affect their business
- 7% didn't know whether they would be affected or not
While businesses have been found to be taking steps towards MTD, a high number of them haven't yet invested in software. When asked about their preparations:
- 48% had discussed the changes with their accountant
- 17% had purchased a software package
- 54% of firms said they have researched MTD software
- 48% had started keeping digital records
Understanding the specific requirements of MTD was found to be lower than expected with only 51% of businesses being able to remember one requirement. Out of the people asked, 12% only answered incorrectly and 37% couldn't think of any MTD requirements.
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