Making Tax Digital small business survey

Ipsos MORI has published the findings from its research which looked at small business and landlord engagement with Making Tax Digital (MTD). The research, involving 2,900 businesses and landlords, took place between September and December 2016 when it was anticipated that businesses and landlords with turnover above £10,000 would be required to report quarterly for income tax. Since then the timetable has of course changed and the focus has shifted to VAT reporting from April 2019 for VAT registered businesses with turnover above the VAT threshold.

The key findings from the research were:

Using digital tools for tax – as expected, small businesses and landlords rely heavily on spreadsheets and paper documents. Just 26% of the population used software (including apps) to carry out tax-related tasks, although this rose to 52% where the business was liable to corporation tax.

Barriers to compliance – some taxpayers explained their concerns about complying with the new rules. In particular they were worried about whether they had sufficient IT skills to use software and the time that would be needed to provide information more frequently.

Engagement and support needs – the research confirmed that businesses would be more willing to make the transition to MTD if the value of doing so outweighed the administrative burden. In fact some taxpayers commented that they would rather pay a penalty than comply if that were cheaper. Guidance and support on how to prepare for MTD was requested by 40% of those spoken to and the survey revealed that most would ask an accountant or agent for support (72%).