MTD ‘will cost SMEs millions’ » SMEInsider

MTD ‘will cost SMEs millions’

The UK’s small businesses will be far worse off after the introduction of the government’s flagship tax reforms, according to one of the UK’s most respected small business accountants.

Graham Lamont, chief executive of Cumbrian-based Lamont Pridmore, a multi-award winning practice, has estimated that small businesses each face a £1,250 bill to transition towards Making Tax Digital (MTD).

The Government plans for all businesses with a turnover of more than £10k to update tax information on a quarterly basis, with a £400m admin cost saving calculated from the move.

 

‘A significant financial and administrative burden’

However, Lamont believes the 2.6 million small businesses will face an average bill of £1,250 to move to MTD – a combination of increased accountancy fees and software costs. Such a bill would set them back £3.25bn in total.

“Having assessed these documents it has become clear that these new policies will place a significant financial and administrative burden on the majority of small businesses, many of whom represent the backbone of the British economy,” said Lamont.

“It is in stakeholders’ interests to get involved and take action against these proposals, which place a heavy burden on SMEs.”

  • Tony Couch

    For many small businesses this will be as welcome as the loss of the internet and a closure of the UK road and rail network combined.
    It is obvious that HMRC are tasked with bringing tax receipts into the coffers more quickly. Governments are often criticised for being inefficient so from an holistic perspective it is difficult to argue with their aim. Many businesses follow exactly the same approach to improving cash-flow.
    It will be interesting to see how, tied in with these changes, HMRC’s ability to access previously (supposedly) personal and financial information impacts on their popularity and in how organisations respond.
    SME’s are now starting to feel the impact of Living Wage demands, workplace pensions staging dates looming for many more and the real or perceived impact of Brexit. Their appetite to willingly embrace further changes and costs will probably not register on any scale. Any potential benefit of spreading out the cost of taxation over the year rather than having to find it all at once I suspect will not be recognised
    If we add into the mix the poor record of any attempt by government to implement large scale technology projects we have all the ingredients needed for significant disruption. Indeed, if this scenario was replicated in France there would undoubtedly be wholesale revolt and protest.
    Time will tell if Lamont’s predictions prove to be accurate however there is sure to be much more comment, reaction, claim and counter-claim to follow. Lets hope that the resilience of SME to continue to be the backbone of the UK economy stays strong!