Institute of Chartered Accountants in England and Wales tax manager Anita Monteith has said that Making Tax Digital (MTD) should not be mandatory when it is introduced on 1 April 2019.
MTD will be compulsory for VAT registered businesses making annual taxable supplies of over £85,000 ($109.478). As well as making digital record keeping for VAT compulsory it will also introduce a new requirement to file VAT returns directly from software or a digitally enabled spreadsheet.
Monteith said: “Recent research by ICAEW revealed that over 40% of businesses about to be affected by MTD for VAT are not yet aware of it and that a quarter of all businesses are still using a paper based accounting system – paper based records will not be permissible for MTD for VAT.
“We support HMRC’s ambition to increase the use of digital technology, but we are concerned, as is the committee, that many VAT registered businesses are not going to be ready for implementation in April 2019. Direct communication by HMRC about this major change is only just beginning and with only four months to go, there is not enough time for businesses to act.
“Time is running out. MTD for VAT is a major change in tax administration and, with its start date coinciding with Brexit, it is important for businesses, the economy and the UK tax system that it is a success. This is too important to be rushed.”