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Survey shows businesses slow to prepare for MTD

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The number of businesses that say they are ‘very confident’ of meeting the making tax digital (MTD) deadline has only marginally increased (from 4% to 6%) in the last three months, according to a survey carried out by EY.

The survey, which involved over 1,300 tax professionals, including heads of VAT, tax and finance functions, also found that nearly 50% of respondents have not started planning for MTD and are either ‘only somewhat confident’ or ‘not confident’ that they will be ready for the deadline on 1 April 2019.

Jamie Ratcliffe, UK head of indirect tax at EY, commented: ‘Given the number and importance of the challenges UK businesses are facing, including Brexit planning for March 2019, it is unsurprising that many are struggling to balance these multiple priorities.’

Awareness of MTD was low in around 50% of the organisations surveyed and probably limited to those involved in indirect tax or who are directly responsible.

Fiona Campbell, associate partner at EY, stressed the importance of awareness, given the time and budgetary resource needed to make the changes required to systems and processes. ‘If management teams are unaware of the significance of MTD and making their businesses compliant, then building a strong enough business case to fund these changes is going to be a challenge,’ she said.

HMRC has stepped up its publication of detailed guidance in the second half of 2018, including new VAT Notice 700/22, which announced a ‘soft landing’ period, allowing businesses an extra year until April 2020 to create digital links between VAT software programs.

However, EY’s research indicates that this breathing space may be having an adverse impact on MTD readiness planning, ‘lulling some businesses into a false sense of security’ by encouraging them effectively to work towards the April 2020 deadline. Businesses should use the 12 months following the 2019 deadline as a useful period to invest in identifying the best possible solution for them, not as a reason to delay, Campbell said.

HMRC published its most recent piece of guidance, ‘Making tax digital: how VAT businesses and other VAT entities can get ready’, on 17 September (see