Just one in 25 of businesses in the Yorkshire and Humber have registered for Making Tax Digital ahead of the looming April 1st deadline, according to figures obtained by Clive Owen LLP from HMRC.
Of 50,545 VAT-registered businesses in the region, only 1,973 have signed up for the compulsory measure – suggesting many are unaware of MTD, don’t believe it applies to them or are simply ignoring one of the biggest ever changes to the tax system.
According to HM Revenue & Customs, just 29,230 – or 2.4 percent – of the UK’s total 1.2m businesses required to register for MTD had done so by March 4th. The region with the lowest number of sign-ups was Northern Ireland with 399, while the highest is London with 3,934 followed by the East of England with 3,035.
The figures were supplied by HMRC following a request under the Freedom of Information Act by the York-based accountant.
MTD is a major initiative designed to modernise the UK tax system by changing the way VAT registered businesses create and submit their tax returns and will eventually be extended to other taxes, such as Corporation Tax.
From April 1, VAT-registered businesses must file their returns electronically quarterly and retain digital records of transactions using third-party MTD compatible software.
The introduction of a fully digital tax system – which currently excludes businesses below the VAT registration threshold of £85,000 – is aimed at reducing errors, streamlining the system and providing HMRC with more accurate information.
HMRC has indicated it will adopt a light touch approach to imposing penalties on late VAT submissions during the first 12 months. However, this will not apply to digital record keeping.
It has said that, in practice, businesses filing quarterly won’t need to send their first MTD submission until August at the earliest and, as a result, it is expected some will not register until nearer their first filing date.
Rosemary Anderson, Tax Partner at Clive Owen LLP, York, said: “With less than one month to go until the system changes, it is both surprising and concerning that less than 4% of businesses in the region are prepared.
“From our research, it appears that there is a lack of awareness among businesses, who may wrongly believe that they are already compliant.
“It’s important that businesses realise that this is not just about submitting taxes online, which many businesses already do, but about digital record-keeping and using compatible software to do so.
“At Clive Owen LLP, we are providing every support to our clients to ensure they are match fit, come 1 April. We urge businesses across the region to ensure that they take extra care to be diligent as we approach the deadline for what is a significant change to the UK tax system.”