SMEs across the UK could benefit significantly from a productivity boost as a result of upcoming tax digitalisation, new research suggests.
According to The Productivity Payout: UK Small Businesses and the Digital Economy by Volterra Partners in association with Intuit QuickBooks, the UK government’s Making Tax Digital initiative (MTD), to digitise VAT in April of this year, will create an annual benefit of £6.9 billion, or £46 billion over five years, in net gains in turnover and growth for the UK economy.
MTD will require every VAT-registered business earning above the £85,000 threshold to file their tax returns digitally. According to the report, once businesses integrate technology to become MTD compliant, a “digital snowball” effect is likely to occur as they experience knock on effect benefits that will drive increases in SMEs’ levels of productivity.
Adding to this, research by HMRC on the state of business preparedness for the introduction of MTD in five weeks’ time has taken the accounting profession by surprise.
The findings show that 81 per cent of mandated businesses – those which will have to comply with MTD from 1 April – are aware of the campaign, 93 per cent already use digital record-keeping and 79 per cent are already using software or apps for keeping business records.
Furthermore, 83 per cent of those that were aware of MTD have already started to prepare for the change, while 62 per cent of them did not foresee any barriers to implementing it.
The main concerns cited focused on new software or IT requirements (36 per cent) and the perceived additional financial cost (29 per cent).
However, although awareness of MTD is increasing as the deadline approaches, the state of preparedness among businesses remains open to question.
How Beavis Morgan can help you and your business
Growing businesses often don’t have the time or resource to set up a full accounting function within the business. That’s why, at Beavis Morgan, we offer the capability to outsource your finance department to us.
We will take care of your day-to-day accounting needs, oversee the MTD for VAT changes on your behalf, and provide you with a single point of contact so that you can focus on what you do best – growing and managing your business.
We will also help you navigate any potential pitfalls and ensure all your accounting, financial and bookkeeping needs are managed from one place, so you don’t need to act as the go-between for your accountant and bookkeeper.
You will never need to worry about missing a VAT deadline, or the complexities of running payroll.
You will have access to accurate, reliable and timely financial information when you need it, whether that be profit or cash focused, or both, to accurately and effectively manage the company’s finances and drive growth.
Our business experts will work with you to identify your requirements and then design and implement a system that will provide all the information you need, within a cost effective and efficient framework.
In turn, if you have any concerns regarding your tax return or other related matters, our experts at Beavis Morgan are available to assist. We take the hassle of dealing with HMRC away from you, so you don’t need to liaise with them directly.
Contact your usual Beavis Morgan Partner for further information and assistance.