Less than 15% (14.6%) of accountants and bookkeepers are confident in their understanding of the next stage of Making Tax Digital (MTD) and its impact on tax, according to new research from FreeAgent.
The group surveyed accountants and bookkeepers based in the UK and found that over a tenth (11.8%) either “don’t know anything or hardly understand anything” about the next stage of MTD and its impact on tax.
However, the majority (97.2%) believed that their clients need to have an understanding of the legislation.
HMRC introduced the first stage of MTD in April 2019. Within the stage, currently VAT-registered businesses making VATable sales above the VAT threshold of £85,000 a year are required to keep digital records and submit their returns digitally as part of MTD rules.
The next stage of the roll out, which is due to come into effect April 2022, will require all VAT-registered businesses to follow Making Tax Digital rules.
HMRC said that MTD’s are part of the government’s plans to make it “easier, more efficient and effective” for individuals and businesses to get their tax right and keep on top of their affairs.
Despite this, nearly half (44.8%) of the respondents believed that changes resulting from MTD over the coming years will mean it will “take longer to complete compliance work” for clients compared with a fifth (20.3%) who believe that it will take less time.
Ed Molyneux, co-founder and CEO, FreeAgent, said: “Although MTD is the biggest change in tax for a generation, it’s clear from our research that there is still a lot of uncertainty and confusion about the legislation.
“Evidently, there is still a lot to be done to help businesses and their advisors adapt to these changes. “With future waves of MTD coming into effect over the coming years it is vital that businesses are properly informed about how the changes will impact them and know how to manage the transition as easily as possible.”