The last few years have highlighted the need for businesses to accelerate their digital transformation efforts in order to survive. In line with this, the government’s plans to digitalise the tax industry mean that VAT-registered businesses must use software that’s compliant with their Making Tax Digital (MTD) initiative from November 1. However, research reveals that an alarming number of businesses are still in the dark with regards to the critical details – just 38% of businesses knew the correct deadline for MTD, while only 32% fully understood the new reporting requirements.
Currently, one in four businesses have stated that the digital transition of tax was ‘extremely’ or ‘very’ challenging, and it’s clear that accountants are also struggling with the new requirements with 34% planning to seek support from software firms to assist with the digitalisation process. With this in mind, Tommy Mcnally, leading tax expert with over a decade of experience in the industry, and CEO and founder of trusted tax-refund app, Tommys Tax, discusses how the digitalisation of tax could result in a swifter process for the 37 million people who are PAYE, CIS and self-employed workers who currently don’t have to means or knowledge to claim back what’s rightfully theirs.
The MTD scheme is set to provide a more cost-efficient and structured method to process tax returns without the chance of human error – according to HMRC, this cost the Exchequer £8.5 billion from 2018-2019 – not only that, the traditional processes for invoicing, filing and handling returns are often slow and laborious, meaning that the MTD scheme could decrease the number of penalties and regulations that businesses weren’t aware of in the first place – deposing of any issues that come with this such as reputational damage or a loss of sales. Businesses must now keep digital records from 1 April 2022 onwards, or else risk paying fines from January 1 2023.
In a period of widespread economic uncertainty, Mcnally urges employers and employees across the UK to take this opportunity to become more educated when it comes to tax returns, and what you’re eligible to claim back. With around £20 billion of tax left unclaimed every year, this marks a crucial period for Brits navigating a loss in capital across all domains and could even act as a vital lifeline for families struggling with soaring costs amidst the current climate.
Tommy Mcnally, leading tax expert and CEO/Founder of Tommys Tax, comments on the government’s tax reforms:
“For the majority of people, taxes can be boring, confusing and anxiety-inducing, which is why millions of tax rebates are left unclaimed. Knowing what you can and can’t claim for isn’t easy to understand, however with our service, it becomes so simple and allows people to claim what’s rightfully theirs. With nearly everyone impacted by the increase of cost of living across the board, there are ways in which people can inject a much-needed boost into their bank accounts.”
