Nearly 300,000 SMEs not ready for VAT changes

The survey found that 297,000 small businesses in the UK are not yet compliant for the change, which is part of the government’s Making Tax Digital strategy.

From April 2022, VAT-registered businesses with a taxable turnover of less than £85,000 ($112,422) — the last group to require compliance — will have to keep digital records and use software to submit their VAT returns.

The change is due to impact 1.1 million small businesses in the UK.

“It’s human nature to delay things we find stressful, and QuickBooks’ research shows small business owners find their VAT returns particularly taxing,” the report said.

On average, small business owners spend four hours a month on their VAT returns — the equivalent of more than half a working day — and for one in five (20 per cent) this rises to over seven hours, or a whole working day.

One-third of the businesses surveyed said they were also experiencing stress around VAT returns.

According to the survey, small business owners are worried that they may face a hefty fine for filing their tax returns late or incorrectly, which could be preventing these companies from reaching their potential.

Two in five small business owners say they could run their businesses far more effectively if they weren’t worrying about their VAT returns, while more say they could be focusing on growing their businesses.