Small businesses not prepared for tax digitalisation, survey finds

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21st February 2017 11:56 - Financial Services

Small businesses not prepared for tax digitalisation, survey finds: A recent financial services survey by the leading membership association of independent chartered accountancy and law fims, UK200Group, has revealed that 65 per cent of its members’ SME clients are not using software to manage their accounts at the moment.Small businesses not prepared for tax digitalisation, survey finds

If businesses are not using software to help manage their taxes, they will be mandated to do so in order to adhere to the HMRC’s new ‘Making Tax Digital’ scheme, whereby it is hoped that all businesses will report their tax digitally by 2018.

The survey revealed which bookkeeping methods were the most popular amongst the businesses surveyed by the researchers. The most popular bookkeeping method was using software (35 per cent), using a computer (27 per cent), keeping manual records (23 per cent) and the ‘shoebox method’ (16 per cent).

Of the survey respondents, just 35 per cent said that they currently use software in their company, for example, Xero, Cashflow or Sage.

Although businesses are not currently mandated to report their tax every quarter, this will be the case by 2018. The process is expected to not be too costly for businesses that already utilise software. However, the 27 per cent of businesses who currently only use computers (i.e spreadsheets) will need to switch to using software, which could mean retraining employees who are not accustomed to the new programmes.

However, one of worst affected categories will be those who keep manual records, as a lot of staff training will be needed to move staff away from doing things manually and begin to use new software. As well as this, those who have adopted the ‘shoebox method’ of not recording business transactions and letting their accountant fill the details in prior to annual tax returns, will face a great shock.

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