SMEs at risk of digital exclusion new report finds » SMEInsider

SMEs at risk of digital exclusion new report finds

This article was previously posted on Accountancy Age

Smaller businesses could be excluded from government plans for making business transactions digital, found new research by the ICAEW.

Ahead of the consultation deadline for ‘Making Tax Digital’, the ICAEW has compared the success and failure of global attempts to digitalise tax in the report ‘Digitalisation of Tax, International Perspectives’.

David Lyford-Smith, ICAEW technical manager, said: “There must be an avenue for those who cannot comply with digital reporting to avoid penalties; this may be through traditional paper-based record keeping or via supporting a network of accessible and affordable tax agents.”

The ‘”largest and most persistent” issue is digital exclusion, which is common among smaller businesses. The government may work to educate and provide resources but “total compliance is impossible”, the report stated.

In other countries digitalisation of tax has been introduced, “we should look at examples to see universal impact” added Lyford-Smith. “Estonia’s digital transformation is one of the leading examples and yet there is digital exclusion as in remote areas internet connectivity is poor.”

The results of an ICAEW survey earlier this year showed that only 25% of UK businesses maintain electronic accounting records, “So there is a huge amount to be done by businesses, HMRC and the software industry in a very little time” said Lyford-Smith.

“We believe the move to digital should not be made compulsory and instead should be a matter of choice for business owners.”

  • Aaron

    I hope (and presume) this article is oversimplifying the issues here. From a customer-centric perspective, we’d consider it best practice to continue use of a legacy system for some time while new systems are being implemented, tested and up-take rates for conversion continue to grow. Rarely in the consumer market would we force our customers to adjust immediately, unless we have an acceptable “kill rate” in mind. Better to ease the transition and reduce frustration with a new system. It baffles me why a governmental agency would not operate with the same method, but I understand knowledge is often trapped within sectors. So, I hope this article is simplifying the issue…