A new report reveals the impending digitisation of the UK’s tax system will deliver improved revenues for the UK’s army of small businesses, resulting in net gains in turnover and growth for the national economy.
Independent economic consultants, Volterra Partners, assessed the impact of the new Making Tax Digital (MTD) system and concluded that MTD had the potential to have a “digital snowball effect” on small firms up and down the country.
MTD could deliver a productivity boost worth £57 billion to the UK economy within the first five years of its operation.
It predicts that MTD will reduce the administrative burden on small firms, freeing up more time for them to dedicate to activities such as training, sales and marketing.
On average, MTD is expected deliver average net gains in annual revenue of £1,900 for sole traders and a whopping £18,000 for small firms with 10 to 49 employees.
Chris Evans, Vice President and UK Country Manager, Intuit QuickBooks, said: “The report highlights that a digital-led approach will be transformational for small businesses, who are the backbone of the UK economy.
“It will enhance cashflow management and allow [small firms] to get paid faster and access capital to grow, powering prosperity across the UK.”
MTD comes into effect for VAT-registered businesses with annual turnover above the VAT registration threshold of £85,000, for VAT periods starting after 1st April 2019. Businesses affected will be required to maintain digital VAT records and submit their returns to HM Revenue and Customs (HMRC) via MTD-compatible software.
Over one-million UK small were yet to register for MTD for VAT at the beginning of March.
If you are looking for support and guidance to sign up to MTD for VAT and meet your new digital obligations, we can help.
We will be able to advise you on the most suitable MTD-compliant software to manage your digital records, making your bookkeeping easier.
Our network of highly-experienced accountants has spent a great deal of time developing the right support services to help the UK’s army of small businesses through this period of change.