Give us your details and we’ll be in touch asap

Insights

All Articles

Business Services

Business Tax

Personal tax

Probate and Inheritance Tax

VAT

Business Services

MTD for VAT costs more time and money than expected

By RJP LLP on 10 February, 2020

Making Tax Digital was intended to simplify tax compliance for businesses, but the results show a very different picture. According to a new ATT and CIOT survey, 70% haven’t seen a reduction in accounting errors and 30% have seen errors increase. In addition to this, businesses have seen their compliance costs rise, with the average business owner spending hundreds of pounds extra on MTD for VAT compliance. 45% of respondents have spent between £109 and £500 on costs and 12% have even seen their costs soar over £5,000.

Compare this to the estimated average cost of £43 per VAT-registered business made by the government – the reality is significantly more.

The CIOT survey also found that businesses are not experiencing an increase in productivity in return. Only 14% experienced an MTD productivity boost and 51% have seen productivity drop.

The survey results indicate that MTD for VAT has not made tax easier and the change has not benefited businesses. Armed with these findings, the CIOT and ATT will be asking the government to conduct a full review of MTD before its scope is further extended.

VAT-registered businesses with a turnover above £85,000 have been submitting their VAT returns using MTD-compatible software since April 2019. Plans were in place for MTD to be extended to other taxes, but these have been postponed indefinitely.

The ATT and CIOT conducted their survey of business owners and accountants throughout December 2019 and January 2020 and based their reporting on a total of 1,091 responses.

If you have any concerns relating to MTF for VAT, please contact partners@rjp.co.uk.

Read more articles like this

Summer Budget 2020 Update

Furlough Scheme Fraud

The Updated Furlough Scheme – claims for June and July 2020

Case update: New ruling over tax relief and SIPPs

Extension to the self employment support scheme

Share this:

All Articles

Business Services

Business Tax

Personal tax

Probate and Inheritance Tax

VAT

Image

31 December 2020 - Review disposals of chargeable assets to avoid a possible CGT increase

Capital gains tax is due to be reviewed by the government and if a CGT rise is announced, the new rates may become effective from the next tax year on 6 April 2021. Take advice now if you are thinking of selling property or have other assets giving rise to a capital gains tax liability.