At the time of the survey, which was conducted in July 2018, almost half of respondents (49%) had not even heard of Making Tax Digital (MTD), indicating that the Government needs to do a great deal more yet to raise awareness.
Among those business owners who will be required to comply from April 2019, the figures were not much better - only 58% said they were aware of the change.
38% of businesses surveyed said they used accounting software, which is a significant improvement on the 25% recorded in ICAEW's 2016 survey. Among VAT registered businesses this percentage increased to 54%.
Of those businesses that were aware of MTD, three-quarters have a plan in place to cope with the transition. 20% intend to buy new accounting software and a further 15% have already done so.
One fifth of the businesses surveyed who will be required to comply with MTD from April 2019 say they have made no preparations themselves at all.
In our view HMRC needs to do a great deal more to raise awareness of MTD among the small business community which, understandably, has plenty on its plate already besides spending time and effort on digitising their tax compliance systems.
Technology undoubtedly offers a path to improving the tax system, but any changes do need to be thoroughly tested and introduced over a sensible timescale that does not leave taxpayers behind.
It is still possible that MTD for VAT may be delayed another year; unless and until this happens, though, it looks like VAT registered business who trade above the registration threshold now have just a few short months to get ready.
