Committee warns small firms 'could pay heavy price' for MTD for VAT
The Economic Affairs Committee has warned HMRC that UK small businesses 'could pay a heavy price' for Making Tax Digital for VAT (MTD for VAT).
In a new report, the Committee stated that HMRC has 'failed to adequately support small businesses' ahead of the introduction of MTD for VAT.
The initiative is set to come into effect from 1 April 2019 for businesses which have a taxable turnover above the current VAT registration threshold of £85,000. Under MTD for VAT, firms must keep some records digitally, and must submit their VAT returns via an Application Programming Interface (API).
Many businesses 'will not be ready' for the introduction of MTD for VAT, according to the Economic Affairs Committee. It also stated that it remains 'unconvinced' in regard to HMRC's claims that the new digital system will 'narrow the tax gap'.
'HMRC has neglected its responsibility to support small businesses with MTD for VAT,' said Lord Forsyth of Drumlean, Chairman of the Economic Affairs Committee.
'HMRC [is] not listening to small businesses, while offering a six-month deferral to many in the public sector.'
The Committee has urged HMRC and the government to 'start listening' to small firms' MTD for VAT concerns.