Making Tax Digital must improve small business’ experience of HMRC, says FSB

The Federation of Small Businesses (FSB) has said that Making Tax Digital (MTD) must be treated as an opportunity to “improve the small business user experience of HM Revenue & Customs (HMRC).”
The comments come after a survey carried out by the FSB found that many small and medium-sized enterprises (SMEs) are struggling with tax compliance – and that most find the likes of VAT, pay as you earn (PAYE) and National Insurance Contributions (NICs) particularly difficult to navigate and understand.
According to the FSB’s research, these three taxes alone take the average small businesses approximately 95 hours a year to assess, administer and remain compliant with.
Following the findings, the FSB is calling on the Government to use the upcoming introduction of MTD as an opportunity to ‘streamline’ the tax compliance process for SMEs.
As it stands, MTD poses a number of challenges for businesses – which the FSB feels are likely to prove overwhelming for SMEs that are already feeling run-down by their compliance responsibilities.
“The roll-out of Making Tax Digital needs to be seen as an opportunity to radically improve the small business user experience of HMRC,” said Mike Cherry, Chairman of the FSB.
“Done right, MTD could help streamline the process of small business tax compliance. Its success will hinge on a thorough user-testing and piloting period, significant improvements to HMRC’s user support channels and proper investment in the digital capabilities of small firms.
“It must remain voluntary for small businesses below the VAT threshold,” he warned.
Mr Cherry added that MTD should be ‘broken down’ in such a way that it provides other benefits to businesses that use it.
“Breaking down the process could also bring benefits. Giving firms an estimation of what tax bills will look like a few months before they’re due would help businesses to plan ahead.
“Equally, the ability to pay in instalments could make managing cash flow more straightforward. The easier taxes are to pay, the easier it will be for HMRC to collect revenue,” he said.

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