Half of small businesses have lost money on self-assessment
A survey of small businesses has revealed that 49% have, at some point, lost money through self-assessment submission errors, either through paying fines or by paying additional tax.
The survey, conducted by a cloud accountancy software company, also asked small businesses for their opinions about the new Making Tax Digital initiatives that will change the way that small businesses pay tax.
Of the 1,000 respondents, 62% said that they were prepared for the changes, with 20% reporting that they weren’t aware of the changes.
One of the requirements of Making Tax Digital is that small businesses will have to provide quarterly summary updates to HMRC about their finances.
Asked about their concerns with Making Tax Digital, 48% of those surveyed said that they thought it would be more confusing than the current system, while 13% worried that they weren’t tech savvy enough to use the new system.
Only 23% of those surveyed said that they weren’t concerned about making the switch to Making Tax Digital.
This, experts worry, could lead to even more businesses making mistakes and losing money in the future.
Responding to concerns about the Making Tax Digital scheme, at the Spring Budget 2017, the government announced that it would provide 3.1 million small businesses with an extra year before the requirements became mandatory.
Small businesses will now have until 2019 before they are required to keep digital records and submit quarterly updates to HMRC.
Although many businesses have doubts about making the switch over to Making Tax Digital, 46% of the small business respondents said that they thought the tax process had become easier in the last five years, compared to 33% who thought it had become more difficult.
Miles Grady, Director of CloudAccountant.co.uk said: “There’s still a question mark over whether Making Tax Digital will benefit small businesses. This survey shows that it’s easy to make mistakes on the old self-assessment system, but lots of owners believe that Making Tax Digital will make things more complicated not easier.”
Cloud accounting software makes filing taxes simpler for small business owners and platforms like Xero and FreeAgent can support Making Tax Digital reports and updates.