Digital tax reforms still set to trouble smaller firms
Small business owners could still struggle with the Making Tax Digital scheme, new research has suggested.
According to research from Geniac, which looked at the potential impacts of the new system, businesses are going to require a lot of time to complete the system.
A consultation from HMRC on the Making Tax Digital Roadmap is coming to a close – nearly a year after it first launched – and the study highlighted some concerns among SMEs.
Part of the proposals includes a requirement or businesses to send digital quarterly tax updates, but this has caused anxiety among particularly under resourced small businesses.
These firms say they lack the financial expertise possessed by larger firms when it comes to taking on additional administrative tasks.
Some 69% of SME leaders said they have adopted a ‘do it yourself’ approach to their accountancy, tax issues and company formation, meaning they are attempting to overcome complex issues without assistance.
The average owner said they were spending around 37% of their time on admin tasks in the first year of trading, and many fear more complex processes will increase that time further.
Nearly three quarters of business owners said they feared for the growth of the company if they had to overcome more financial admin – 73% said that less admin would mean they could grow their company faster.
Half of all SMEs have rejected external help with their finances saying that it is too expensive while 35% believe their existing staff do not have the relevant skills.
This doesn’t always have the desired results though – 32% of owners said that using a DIY approach in an attempt to save costs had actually cost them money, as they had required expert help to fix errors as they had attempted tasks they were not qualified to complete.
Geniac co-founder Eduardo Martinez suggests that more admin could have a devastating effect as many owners are already struggling to come to terms with their business finances.
Managing finances in an effective way is an essential part of business, as without it a firm runs the risk of liquidation or other financial distress.
Businesses should seek advice on refinancing and on other available options if they find themselves in too much difficulty, as there might be a solution available to them.
By Phil Smith
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