HVP Magazine – Over 40% of plumbers unaware of impending Making Tax Digital rules



New research from Mazuma shows that two-fifths (41%) of plumbers are unaware of the impending Making Tax Digital (MTD) regulations that will come into effect in April 2023.

The survey of 200 plumbers also comes with a warning that up to 83% risk being penalized if the law is enforced, because no online apps or software are used to track revenue.

Under MTD rules, any business, sole proprietor or landlord with an income over £10,000 is required to file returns with HMRC five times a year rather than annually as they currently do. With a currently reported loss to the Treasury of £9 billion a year due to incorrect tax forms, the government chose to come up with a plan that not only takes the annual stress out of entrepreneurs, but also minimizes economic financial risk.

Lucy Cohen, co-founder of Mazuma, commented: “While this system is intended to make the filing of tax returns much easier, it is clear that HMRC has not been transparent enough. Extrapolating our numbers, that could mean we’re dealing with more than 124,000 plumbers currently in violation of the new legislation that comes into effect in 18 months.

“More worryingly, these numbers refer only to plumbing — a small fraction of the self-employed community. According to the Federation of Small Businesses, there were 5.9 million small businesses at the beginning of 2020.

“But this figure is likely to be much higher today due to the number of jobs lost due to the pandemic, which has caused a spike in the number of people who are self-employed. The exact figure of how much sole proprietorships can suffer enormously under the MTD rules is beyond thinking.”

Plumbers were the most in-demand professionals of 2020. Overall, they are the fourth most in-demand people across all industries and sectors, and are expected to remain so for the next decade. However, given Mazuma’s recent findings, almost all plumbers are at risk of accruing up to £292 annual interest on top of their tax bill due to a lack of understanding of the rules or an inability to follow the current system.

The risk of MTD is that many plumbers and other self-employed choose to close their business and instead work for a company where they are under a PAYE system. For the public, this could lead to excessive costs for hiring services, such as plumbers, and for the economy, a potential loss of up to £125 billion to the country’s recovery from the pandemic.

Cohen added: “It seems that HMRC has left much of the communication about this issue to software vendors. And of course the biggest software houses have happily taken on that role – and since it’s those companies that will benefit a lot from the introduction of Making Tax Digital – it’s no wonder they happily spend their advertising budgets on it, the problem is that many of those vendors have software products that just don’t work for micro-enterprises.

“What plumber has the time to learn how to use a piece of software on top of the long hours they already put in? Not only that – many will have to pay a significant amount to complete the additional burden of filing five times a year.

“Making Tax Digital is a shoehorn in a digital solution in a non-digital world. It is elitist and it will undoubtedly create a bipartisan society among the self-employed.”

Comments are closed.