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FSB recognises the significant potential Making Tax Digital has for some small businesses – particularly around digital tax accounts. However, since it was announced in 2015, we have actively engaged with HMRC to communicate our key concerns around the proposals, including on mandatory quarterly tax reporting.
We are still concerned that the cost of upgrading to the mandated level of software, for those small businesses above the VAT threshold will cost businesses too much – detracting from vital business funds.
Government needs to ensure the software is low cost and beneficial to businesses
FSB secured concessions from HM Treasury which included a longer lead-in time for some businesses to join Making Tax Digital as well as the offer of direct financial assistance for some small firms. In addition, the Government agreed to remove small firms and the self-employed with modest turnovers from the proposals. This means that in addition to the 1.6 million small businesses and landlords that were already excluded from Making Tax Digital, a further 1.3 million small firms and landlords will now no longer be in scope. This means that half of the UK’s 5.5 million small businesses will not be affected by mandatory quarterly tax reporting.
FSB has also secured provision for FSB members to participate in the user-testing of HMRC’s proposed digital systems and will be circulating a concession letter from Government shortly along with a request for participants.
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Weekly Brief 45 - Friday 8 November
Report: Implementing Making Tax Digital: International evidence of the challenges for small firms