Research published by the Federation of Small Businesses (FSB) has found that putting Making Tax Digital (MTD) software into place ‘could cost UK small firms an average of £564’.
MTD for VAT is set to come into effect from 1 April 2019 for businesses which have a taxable turnover above the VAT registration threshold (currently £85,000). As part of the initiative, businesses must keep some records digitally, using ‘functional compatible software’. This means a ‘software program or set of compatible software programs which can connect to HMRC systems via an Application Programming Interface (API)’.
The FSB revealed that 23% of small businesses have received quotes for MTD-compliant software, but are yet to make a purchase.
According to the research, bigger businesses must pay higher prices for MTD-compliant software. Firms with a turnover between £500,001 and £1 million could be landed with an average bill of £872 for MTD software. Businesses with a turnover of more than £1 million could be given a bill of £1,019.
‘We’re only three weeks away from the roll-out of MTD, and small businesses are clearly not prepared for it,’ said Mike Cherry, National Chairman of the FSB.
‘At a time when small business confidence is in the doldrums – and wages, auto-enrolment contributions and business rates are rising – more costs and admin burdens are the last thing they need.’