Retailers at risk from lack of digital tax plan
Written by Peter Walker
Smaller retailers which have not updated their accounting software could be at risk of falling foul of the taxman.
Those above the £85,000 VAT threshold need to make sure they are Making Tax Digital (MTD) compliant by 1 April, which means businesses have to digitally submit their VAT returns to HM Revenue & Customs.
According Anna Bravington, director of retail at e-commerce platform TIDE, this is a real issue for many small businesses, as copying and pasting from spreadsheets or any other manual system will not be accepted, “and HMRC are typically not shy of fining people when taxes don’t get paid”.
There will be an initial cost and time impact on this change if a retailer isn’t already on a compliant system, as it means purchasing new accounting software and taking the time to move all of the financial data over.
“In the current climate, where retail budgets and workloads are stretched thinly, smaller retailers with less resources to hand will find the change to MTD compliance stretches them even further,” commented Bravington.
A recent survey from the Association of Convenience Stores found that only a quarter of the retailers they spoke to were aware of their MTD responsibilities, and only six per cent had MTD compliant software.
Meanwhile, the Federation of Small Businesses has claimed that the costs of implementation amount to £2,770 per year per business – which includes licence costs and staff training.
“The cost of change on time and resources at a time when the retail sector is already struggling, will no doubt be causing many retailers to delay until the last possible moment to comply with MTD,” said Bravington.
However, she added that there is an opportunity for smaller retailers if they fully embrace the change and look at the bigger picture.
“There are a great deal of benefits to digitisation, such as less time spent on admin tasks, more accurate financial data and more transparency on cash flow,” she stated, noting that accounting giant Sage estimates that small business could save around £17,000 per year.
For larger retailers there are several options for connectivity between systems, or the option of custom integrations. “Unfortunately, many of these solutions have been outside of the small retailers budget,” said Bravington.
“The gap to fill is how technology suppliers support the smaller retailers with affordable and reliable connections – those that support this market and gain a good reputation as being reliable will forge ahead,” she continued, noting that with over 168,000 smaller retailers in the UK, the need is great, yet largely un-catered for.
“The retail tech sector needs to ensure that there are reliable, compliant connections between the accounting systems and sales systems such as the retailers’ e-commerce system, or online marketplaces such as Amazon and eBay.