Half of small businesses are still not ready to comply with Making Tax Digital (MTD) for VAT, with just three weeks to go before it comes into effect on 1 April 2019.
The Federation of Small Businesses (FSB) surveyed 746 VAT-registered small businesses and found that 27% of firms have not started preparing for MTD.
A further 23% have received quotes for software that will make them compliant but have not purchased any yet, while only 3% have been part of the MTD for VAT pilot scheme.
Small businesses are expecting MTD-compatible software to cost them £564 on average this year, while the bill could rise to £872 for larger businesses.
In light of the research, the FSB is urging the Chancellor to recommit to a soft approach to MTD enforcement at the Spring Statement on 13 March 2019.
Mike Cherry, chairman of the FSB, said:
"We're only three weeks away from the rollout of MTD and small businesses are clearly not prepared for it.
"That being the case, the Chancellor must double down on his commitment to light-touch enforcement when he delivers the Spring Statement on Wednesday.
"Small business owners shouldn't be punished for honest mistakes, made more likely by a rushed HMRC rollout."
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