Are you ready for Making Tax Digital?

A CARTOON CHARACTER called Dexter the Digital Tax Advisor has been introduced as the face of Making Tax Digital (MTD) for VAT, the biggest change to tax in decades. The campaign was launched by accounting software company Xero after research revealed one in four small business owners admit they have no knowledge that the legislation is taking effect from 1 April this year.

From that date, every VAT-registered business above the £85,000 threshold company in the UK will be required by law to go digital and file its tax through MTD-compatible cloud software. In a survey conducted for Xero in November, some 22 per cent of small business owners said they thought digitally submitted tax returns could cut between six and 10 hours from the process yearly.

Despite the rapid approach of the new rules for 1.1m small businesses operating above the VAT threshold, almost a third of small business owners (29 per cent) admitted having heard of the legislation but not understanding anything about it, while 36 per cent said that the only thing they know about is the 1 April start date.

Furthermore, over a third of small businesses (38 per cent) are concerned about the complexity of the switchover, while the same number have concerns due to a lack of understanding and knowledge about the legislation. Just 23 per cent of small business owners know that MTD will be compulsory for all businesses, while fewer than a third (29 per cent) understand the penalties associated with non-compliance.

Videos of Dexter, which have been created by the Oscar-nominated animators Alison Snowden and David Fine, can be viewed on YouTube.