Small and medium-sized businesses are underprepared for Making Tax Digital (MTD), according to new research by the Association of Chartered Certified Accountants (ACCA).
Working with the Corporate Finance Network (CFN), the ACCA’s SME tracker showed that 14% of accountants in the UK say their SME clients are “unprepared and will not be ready” for future phases of MTD.
In a survey of 8,900 accountants, 40% said their clients are “partially prepared” but are “not confident they will be ready”.
In comparison, only 22% said their clients are fully prepared for MTD and have the appropriate software set up.
Analysis also revealed a north-south divide between SMEs and their awareness of MTD, with half of London-based advisers saying businesses will be ready, compared to with just 17% outside of London.
MTD aims to remove paper-based filing and currently involves online submission of VAT.
From April 2024, MTD will apply to self-employment and property income over a £10,000 threshold, spelling the end of the self-assessment tax return as we know it, while MTD for corporation tax will arrive no sooner than April 2026.
The SME tracker also found that businesses are underprepared for other tax schemes, which could stump the Government’s plans for the future.
For instance, 42% of accountants said their SME clients have not asked about the ‘help to grow’ scheme or do not know what it is.
Instead, businesses are focused on immediate issues, according to the ACCA, such as tax compliance and access to finance.
Glenn Collins, acting head of ACCA UK, said:
“Government strategies to spur investment for the future are not cutting through with SMEs who seem to be taking a short-term approach, coupled with a belief that schemes are not applicable or relevant to them.
“SMEs outside of London also need a comms boost to ensure they’re part of the levelling up agenda – the Government can do this by working with intermediaries and the UK’s local authority infrastructure.”
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