In its ‘Taxing Times’ report, The Federation of Small Businesses (FSB) has revealed small businesses spend up to 15 working days a year on average maintaining their tax compliance.
VAT, Pay As You Earn (PAYE) and Employer National Insurance contributions (NICs) were identified as the three most time-consuming taxes to deal with.
FSB’s report states that the average small firm spends 95 hours a year battling to comply with those three areas of taxation collectively.
One-in-seven (14%) small businesses admitted that the complexities of VAT reporting alone have prevented them from expanding and exploring new opportunities.
Mike Cherry, National Chairman, FSB, said: “We hear a lot about the need to simplify the UK tax code. In fact, our priority should be simplification of the tax compliance process.
“Small firms by and large understand a tax like VAT, for example, but the sheer complexity of VAT administration means they spend 44 hours a year filing returns.
“The roll-out of Making Tax Digital needs to be seen as an opportunity to radically improve the small business user experience of HMRC.
“We now need to see HMRC doing all it can to raise awareness among, and increase support for, small firms transitioning to the new interfaces in under six months’ time.”
From 1st April 2019, all small businesses with taxable turnovers above the £85,000 VAT threshold will be required to start filing VAT records digitally via MTD-compatible software.
Chancellor, Philip Hammond confirmed in his Budget 2018 speech that the VAT registration threshold would remain at £85,000 until at least April 2022; providing much-needed certainty for small businesses that had seen scaremongering reports that the threshold could be slashed by 50% to just £43,000 per annum.
HM Revenue and Customs (HMRC) recently distributed letters to eligible small firms, asking them to take part in an early-stage Making Tax Digital for VAT pilot.
Some 200,000 businesses have been written to, with the aim of encouraging many small firms to adapt to the digital VAT reporting system now.
The deadline for the first digital quarterly VAT returns are due for submission by 7th August 2019, so the clock is most definitely ticking.
If you are confused about your business’ Making Tax Digital for VAT obligations, your nearest TaxAssist Accountant can help.
We offer free initial consultations with straightforward, professional advice on all aspects of Making Tax Digital.
We are partnered with Intuit QuickBooks to provide our clients with HMRC-approved software that makes managing your Making Tax Digital for VAT returns easy, wherever you are.