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This is a new service – your feedback will help us to improve it.

Views:

1. Businesses don’t know it’s happening or what to do.

This is not correct - Even back in December 8 in 10 of the businesses required to join were aware of Making Tax Digital, and over 80% of them had already started to make preparations. HMRC have written to every business to tell them how to prepare and where to get more information. We’ve also worked extensively with stakeholders and software developers to shape the design of the service.

2. Everyone will have to join the service by 1 April.

This is not correct - Businesses are required to join Making Tax Digital and submit their VAT returns using the new service for their first VAT period which begins on or after 1 April. For the majority, who file quarterly, their first MTD returns won’t be due until August or later. But remember – businesses will need to have signed up to the service, begun keeping their records digitally and set up their MTD-compliant software to send information to MTD, in good time before they file their first return under MTD.

3. Under Making Tax Digital, businesses will have to provide more information than they already do.

This is not correct - No business will need to provide information to HMRC more regularly than they do now, nor send any additional information.

4. Making Tax Digital won’t reduce errors.

This is not correct - Keeping records on paper and submitting VAT returns to HMRC manually results in errors – in a recent YouGov poll 61% of businesses said they have previously lost receipts – and errors also occur in the manual transposition of data and manual calculations. MTD offers a more integrated approach to business administration and tax, reducing the time businesses spend on administration in the longer term and making it easier for them to get their tax right.

5. HMRC have underestimated the admin burden and costs to businesses for Making Tax Digital.

This is not correct - There are MTD-compatible solutions available at no or low cost for most businesses – indeed there are already 11 products that are available for free, with varying conditions of use. Costs will differ from business to business, and are influenced by the size and complexity of the business and their degree of digital capability, as well as the type of functionality they want their software to include. Most businesses will be able to claim any costs for hardware and software against their tax.

6. Businesses can’t use spreadsheets as part of Making Tax Digital.

This is not correct - Businesses can choose to use spreadsheets to both maintain digital records and perform tax calculations, provided the spreadsheets combine with some form of ‘bridging’ software that will allow their VAT return data to be sent to HMRC from the spreadsheet.

7. Small businesses should be automatically exempt.

This is not correct - The smallest businesses are already exempt from Making Tax Digital. Only those with taxable turnover above the VAT threshold of £85,000 are required to join MTD, although the c.1m VAT registered businesses below the threshold can choose to join voluntarily. Businesses that cannot go digital will not be required to do so.

8. HMRC will penalise me if I get the new process wrong.

This is not correct - HMRC recognises that businesses will require time to become familiar with the new requirements of MTD. During the first year of mandation HMRC will take a light touch approach to digital record keeping and filing penalties where businesses are doing their best to comply with the law.