It will not be a surprise to very many of our readers to read that the task of complying with tax responsibilities can be an arduous and angst-inducing one for great numbers of small businesses.
It is a subject that may be of particular concern at the moment, however, in light of the evidence that the resultant stress is even causing some small-to-medium-sized businesses to put off meeting the requirements of looming UK Government Making Tax Digital (MTD) rules.
Is anxiety about VAT returns imperilling the success and wellbeing of small business owners?
The majority of VAT-registered firms are expected to complete their return on a quarterly basis, and it seems that existing obligations – never mind future requirements – are causing plenty of small business owners to spend a lot of time fretting over whether they are compliant.
According to the findings of a survey by Intuit – the firm behind the QuickBooks tax software suite – small business owners spend an average of four hours a month worrying about their VAT returns. For a fifth (20%) of respondents, this time was seven hours or more – the equivalent of at least an entire working day.
The greatest concern for small business owners with regard to completing their VAT returns was a fear of making errors, as cited by 44% of those quizzed. 38%, meanwhile, worried about the possibility of penalties, which seems extremely understandable, given that an incorrectly completed VAT return can attract fines potentially running into thousands of pounds.
The adverse impact that tax worries can have on small-business success and even personal wellbeing was also clear from the research findings. 43% of owners of small firms said that they could generate revenue more effectively if they weren’t spending time fretting about their VAT returns.
Over a third (36%) of the survey participants experiencing stress about VAT returns have felt overwhelmed, while 33% have lost sleep and about one in three (29%) have experienced exhaustion.
Thousands of small businesses are yet to prepare for digital tax changes
With it being human nature to delay dealing with things that we feel stressed by, it is unsurprising – but still saddening – news that the owners of small businesses are apparently often leaving the filing of their VAT returns until the last minute.
Some 45% of respondents said they only submitted their returns just ahead of when they are due, while 16% waited until the very last minute, or even file their returns late.
This tendency might be even more concerning, however, given that from April 2022, VAT-registered firms with a taxable turnover below £85,000 will be expected to maintain digital records and use software for the submission of their VAT returns. The deadline, then, is just a few months away, yet Intuit’s research found that among those who had not achieved compliance already, 41% are putting it off.
This is despite the evidence that switching to a digital approach could help in relieving stress like that cited above; 58% of small business owners, in fact, reportedly agree that the use of digital software lowers or could lower stress when handling and submitting VAT returns.
Embrace your own firm’s digital revolution, with a little help from the experts
Are you currently feeling daunted yourself by your small business’s tax and accounting requirements, or on the lookout for ways to bolster the speed, efficiency and accuracy of your existing processes in this area? If so, you are likely to appreciate the know-how and services of our own professionals at TS Partners – not least the specialised QuickBooks assistance in Devon and Somerset that we can provide to firms like yours.
Simply reach out to us now in Wellington, Plymouth or Newton Abbot today, for further information and guidance in relation to your VAT, bookkeeping and related needs during 2022 and beyond.
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