Even though the UK’s Making Tax Digital (MTD) initiative has been mandatory for months now, many firms have still not made the jump and are risking serious fines and penalties for failing to comply.
That's according to a report from automated "Purchase to Pay" provider, Yooz, which polled 200 UK finance leaders and found that four in five businesses are simply unprepared.
In most cases, finding compatible software seems to be the problem. While a handful (3%) haven’t even considered adapting to MTD’s requirements, 12% thought about it, but are yet to start.
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A fifth (21%) started, but are a long way from the finish line, while a third (34%) is almost ready.
“The relaxation period intended to give businesses more time to adapt to MTD’s requirements ended on April 1, 2021, with businesses needing HMRC-approved software to remain compliant,” said Magali Michel, Director of Yooz.
“Businesses that fail to comply with MTD rules could face heavy penalties in a time where many are only just keeping their heads above the water financially. Making Tax Digital is there to keep businesses accountable if and when something goes wrong, and the transition should be seen as an opportunity to embrace new technology and a better way of working.”
Simplifying tax reporting
Making Tax Digital is the UK government’s attempt at simplifying, digitizing, and modernizing the tax reporting process. Instead of being required to file one large document every year, businesses will have to keep digital records of their accounts, using only software approved by the HMRC, every quarter.
For individuals, they are required to send the information directly to HMRC via a personal account.
According to Yooz, finding the right software is one of the main pain points for businesses. The government has promised to provide firms with free, basic software, aside from multiple low-cost options compatible with MTD already on the market.
Furthermore, many programs that UK’s organizations are already using should be compatible with MTD.
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