Report claims that small businesses have benefited from MTD through increased productivity and growth, generating over £815m over six months after its compliance.
According to a study released by Intuit QuickBooks, HMRC’s Making Tax Digital (MTD) has helped small businesses in the UK to generate over £815m in productivity gains over a period of six months since its enactment.
The results claim that almost a third of small businesses have adopted new digital services or products since becoming MTD compliant, meaning that the ‘digital snowball’, forecasted by Volterra Partners as a driver for productivity amongst SMEs, has taken place.
The findings also highlighted an increasingly positive attitude towards MTD since mid-2018:
Chris Evans, VP and UK Country Manager at Intuit QuickBooks commented: “Adopting digital tools is essential for any business looking to grow and succeed in the modern world.
“Today’s findings are encouraging and show that the transition to digital has already led to tangible benefits for some businesses, such as streamlined operations, simplified tax and enhanced cash flow management.”
If digital transformation is taken a step further by HMRC, to cover both Income Tax Self-Assessment and Corporation Tax, it could lead to an even greater uptake and acceptance of digital tax.
The results from Intuit Quickbooks’ report show that not only does MTD enable improved invoicing facilities, but it also generates simpler data sharing with a company’s accountant in general, enhancing the highly beneficial aspect of the digital shift.
Andrew Moyser, Partner at MHA MacIntyre Hudson, believes small businesses should adapt to new technologies to ease their accounting process and produce further productivity, saying: “Businesses that use accounting software typically have greater visibility of their results and can quickly identify any anomalies within their business, which can help drive improvements and growth.”
Moyser also highlighted the growing trend for SMEs adopting new accounting software: “Making Tax Digital and the increasing digitalisation means that over time the use of robust accounting packages is going to become increasingly vital. We expect to see most businesses using software within the next three to five years.”
Whilst certain small businesses remain reluctant to the new process, the Intuit QuickBooks report disclosed that 10% of business owners risk breaching the law by keeping VAT transactions in paper journals.
Focusing on the potential growth of businesses complying with MTD, Evans added: “Businesses that fail to adopt new technologies are at risk of losing out to the agility of those with a digital-first mindset. Our research shows us that those progressive business that take the first step to embrace digital will increase their prospects of long-term growth.”
Source: Accountancy Age