With just one week until HM Revenue & Customs’ Making Tax Digital (MTD) initiative goes live, there have been various “scare stories” reported in the media with warnings of costs and disruption for Britain’s millions of micro and small businesses.
Lee Murphy, the founder and CEO of Pandle, the cloud bookkeeping software provider for the self-employed and microbusinesses, said that the majority of such businesses can dismiss such scare stories.
“The vast majority of VAT-registered businesses are microbusinesses with 10 or fewer employees, and most of these will be scratching their heads over what the fuss is about,” he said.
“For instance, a large proportion of microbusinesses use one of the various popular online cloud software providers which will automatically update to meet the change. For businesses using such cloud software, there will be no additional cost, and many businesses have already been using them for quite some time to file VAT reports rather than through the HMRC portal.
“In this case, it will simply be a matter of making sure the bookkeeping has been done on time: but that has always been the case.
“Many other microbusinesses outsource their bookkeeping to an accountant or bookkeeper, so in their case the change will have no effect on the business since it is all handled by an experienced third party.
“The group most effected will be those microbusinesses who have remained wedded to using paper, Excel or outdated software, and there are quite a few of these too.
“My message to these businesses is you have nothing to fear from going digital. Such software has minimal costs, and there are even suitable free versions online. On top of this, using the simple and low-cost software designed for microbusinesses will be a revelation about how things have improved in the last few years.
“As well as helping businesses to do their taxes and bookkeeping, modern online software does all sorts of labour-saving activities automatically to help busy owners. This includes checking the banking, reconciling payments and invoices, providing real-time financial management information and even sending chase emails to late-payers.”
The new Making Tax Digital rules come into effect from 1 April 2019 for businesses above the £85,000 VAT threshold. Further details can be found here.