LONDON, UK – 29 October 2019 – An independent study released today by Intuit QuickBooks shows that over the six months since HMRC’s Making Tax Digital (MTD) came into force, it could have helped the UK’s small businesses realise over £815M in productivity gains.
Analysis from specialist behavioural economists Volterra Partners predicted the digitisation of VAT could create a “digital snowball” among SMEs, driving productivity through “spill-over” benefits, such as enabling better cash flow and human resources management.
Today’s results suggest this “digital snowball” has taken hold, with almost a third of small businesses [29%] having adopted one or more new digital services or products since becoming MTD compliant.
Chris Evans, VP and UK Country Manager at Intuit QuickBooks said: “Adopting digital tools is essential for any business looking to grow and succeed in the modern world. Today’s findings are encouraging and show that the transition to digital has already led to tangible benefits for some businesses, such as streamlined operations, simplified tax and enhanced cash flow management.”
These findings also show a significant boost in positive sentiment towards MTD since mid 2018, when QuickBooks first started tracking SMB attitudes around this new legislation – which is the biggest tax change in a generation:
Three in five businesses [62%] are now in favour of MTD being applied to other forms of tax
Over half [58%] believe a wider roll out would save them time and increase productivity
Two in five businesses [39%] believe MTD has provided them a more accurate view of their company’s finances
A third [32%] say switching to MTD compliant processes has been no hassle at all
As HMRC explores taking MTD forward, including the rollout of both Income Tax Self-Assessment and Corporation Tax, there may be even greater uptake and acceptance.
Despite signs that most small businesses have been receptive to the change, a small minority are still to embrace the benefits that MTD can bring. 10% of business owners risk falling foul of the law by still keeping details of their VAT transactions in paper journals.
Evans added: “Businesses that fail to adopt new technologies are at risk of losing out to the agility of those with a digital-first mindset. Our research shows us that those progressive business that take the first step to embrace digital will increase their prospects of long-term growth.”
In fact, 30% of those who felt positive towards MTD believed that it was a step towards growing their business and adopting digital into their company. And over two-thirds [70%] of all SMBs say there’s a lot of potential in digitising other areas of tax and having everything working together.
The latest Making Tax Digital updates from HMRC can be found on the gov.uk website, and small businesses can also visit QuickBooks at www.quickbooks.co.uk to understand how the world’s largest cloud accounting solution can help their business benefit from this digital transformation.