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82% of businesses want an expansion to Making Tax Digital

Around 82% of mid-sized businesses revealed that Making Tax Digital (MTD) for VAT has convinced them that further digitalisation will make the tax system more efficient

According to research by BDO eight out of 10 mid-sized businesses believe that moving all tax reporting to a digital process will make the tax system more efficient and that now is the right time to digitalise further areas of tax.

The survey of 500 businesses, with revenue ranging from between £10m and £300m, found that the majority believed that digitalising the tax system would significantly help businesses in the post-Covid, post-Brexit era.

BDO states that Making Tax Digital is ‘wide-ranging’ but that a rethink should ‘absolutely take place to improve HMRC’s resources and systems’ to implement the programme. The firm states that the Chancellor should ‘definitely consider’ which areas of the tax system might benefit from an accelerated move to digitalisation.

Paul Falvey, tax partner at BDO said: ‘The pandemic has put everyone under pressure and HMRC was right to delay some areas of MTD if they did not have the resources to roll it out effectively during the peak of Covid-19.

‘However, HMRC knows that as we emerge from the pandemic, taxpayers still need all of the support they can get and making the tax system simpler and more efficient must be a key area of focus.

‘In the medium- and long-term further digitalisation will enable firms to focus more time on being commercially successful and growing their businesses, which will be a key component of the economic recovery.’

In September 2021, HMRC delayed the switchover to a digital format for income tax self-assessment returns by a year, pushing the start date back to April 2024.  

The tax authority also stated that there would be a delay to basis period reform, with that change not being introduced until 2024 at the earliest.

It is expected that there will be more guidance for businesses in the Budget on Wednesday.

 

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