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SMEs Underprepared for Major Tax Changes

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A Newport-based accountancy firm has seen a steep rise in enquiries about the Making Tax Digital process despite there only being weeks left until the HMRC deadline.

Kilsby Williams, which provides market leading tax advice, has noticed a surge in visitors to the advice page on their website and dealt with an increasing number of calls and emails.

With changes due to come into force from 1 April, businesses only have a limited amount of time to ensure that they’re tax compliant before the deadline.

The Making Tax Digital process is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their tax affairs. These will be fundamental changes in the way that the tax system works.

Rachael Sakkas, Kilsby Williams’s business services manager said:

“Whilst some businesses have left it late in making the necessary changes, there is still time. The majority of queries we’ve had are about options available to clients currently using Excel or manual cashbooks, businesses preparing VAT returns outside their existing software, due to their complex nature and software upgrades.”

A recent Federation of Small Business (FSB) survey revealed that many small businesses aren’t ready for the changes. Of the 750 registered SMEs surveyed, nearly half don’t have the right software in place to deal with the new regulations.

Their study also found that the necessary software to comply with the changes will cost small businesses on average £564. This cost increases to £872 for businesses with a turnover between £500,000 and £1million and to £1,019 for businesses with a turnover of more than £1million.

Rachael said,

“Although it can seem daunting, there are definite benefits to the Making Tax Digital (MTD) process; it will reduce the scope for making errors on VAT returns; help ensure that businesses are paying the right amount of VAT for each VAT period and do not end up with large, backdated VAT demands; and it will help give companies better access to financial information on a timely basis. All of which have the potential to save businesses time and money.

“Some businesses might be unsure about the process but hopefully, in the long run, it will have a positive impact.”