Making Tax Digital: Early impact on VAT below threshold customers

Question 1

1.  Executive Summary

Accepted Answer

1.1 Background and objectives

HM Revenue and Customs (HMRC) sought to understand how businesses below the £85,000 VAT threshold have adapted to the April 2022 Making Tax Digital (MTD) requirements. This follows previous research that looked at the impact of the April 2019 implementation of MTD on businesses above the threshold. [1]

MTD is a key part of the government’s 10-Year Tax Administration Strategy and aims to reduce the part of the tax gap caused by error and failure to take reasonable care, by requiring businesses to keep digital records, use compatible software, and submit updates every quarter. This research had a particular focus on the impact of MTD on scope for error, record keeping and general customer experience.

Kantar Public carried out 50 depth interviews by telephone or video call, lasting up to one hour, with businesses under the £85,000 VAT threshold. Fixed quotas were set based on the turnover of the business, with at least 15 interviews conducted with businesses in each of the following turnover bands: £30,000 or less, between £30,001 to £50,000, and between £50,001 and £85,000. Further flexible quotas were set, aiming for a spread of companies in relation to time since VAT registration, number of employees, type of software used (bridging or fully functional), digital confidence, sector, region, record keeping prior to MTD, use of an agent and business lifecycle stage.

1.2 Customer context

For businesses below the VAT threshold, two of the key reasons for being VAT registered were the perceived credibility for clients that being VAT registered conferred and a desire to claim back VAT on larger expenses. Participants tended to be low volume businesses that usually did not have many VAT applicable purchases or invoices to issue. As such, VAT was not seen as a huge burden, and there was a high degree of satisfaction with the previous system of record keeping and VAT submission.

1.3 The transition to MTD and role of software

Businesses below the threshold heard about MTD requirements either directly from HMRC or from accountants, friends, or family. Once aware of it, businesses spent time investigating the next steps and researching which software options would be most appropriate for them. (Fully functional software enables businesses to keep digital records and submit VAT returns, whereas bridging software connects non-compatible software such as spreadsheets with HMRC systems).

Almost all businesses interviewed changed their record keeping as a result of the transition to MTD, with very few businesses already using fully functional software. In the initial stages of MTD transition some businesses experienced teething issues whilst they adapted to a new system. The introduction of third-party software also created an unknown element in the VAT process, with experiences of MTD highly dependent on how positively the software packages were received.

Similar to those businesses over the VAT threshold, the journey of software use had implications for how the cost and benefits of MTD were perceived. For fully functional software users there were financial costs, but far greater potential for benefits. Bridging software users avoided financial costs but were unable to benefit from the features of fully functional software, whilst important emotional and time costs were still applicable.

1.4 Benefits of MTD for VAT

Most benefits were experienced by fully functional software users. One of the key benefits of MTD that businesses reported experiencing was the improved accuracy of VAT record keeping and submissions. Businesses were positive about the implementation of software as it resulted in reduced human error. VAT submissions being easier to complete was also perceived as a benefit for full software users, and occasionally for some bridging software users.

Some businesses recognised time savings because of the introduction of MTD, though for many as the time burden was previously minimal, any gains were marginal. Some of those businesses that were used to spending a great deal of time on VAT returns experienced productivity gains due to the MTD software saving time. In addition, some businesses that had engaged accountants to review VAT processes saw this use of accountants decline due to their increased confidence in the accuracy of records and submissions.

Some businesses that used fully functional software also experienced wider benefits outside of tax. These included some financial savings due to less reliance on accountants, as well as greater financial confidence. There were also businesses that saw such positive results with digital record keeping software that they significantly increased digitalisation across their business, both in financial processes and in wider business operations.

1.5 Costs of MTD for VAT

Whilst minimal, businesses did report experiencing financial costs as a result of MTD requirements, mainly due to the cost of software, but some experienced higher accountancy fees as well. In addition, some businesses experienced time related costs due to having to adapt to new methods of record keeping and submitting VAT returns. Some participants also reported emotional costs from the transition to MTD, in particular relating to the anxiety of using new software and some resentment at the burden of system change. However this anxiety tended to alleviate itself over time, with most participants overcoming any initial problems relatively quickly, and with practice becoming more comfortable with MTD systems.

Question 2

2.  Research design

Accepted Answer

This section will outline the background to the research, as well as detailing the objectives and methodology used in this study.

2.1 Background and context

Making Tax Digital (MTD) is a key part of the government’s 10-Year Tax Administration Strategy. MTD aims to help reduce the tax gap by requiring businesses and individuals to keep digital records, use software that works with MTD and submit updates every quarter, bringing the tax system closer to real-time. Businesses can choose to use fully functional software, which enables them to keep digital records and submit VAT returns, or bridging software, which connects non-compatible software such as spreadsheets with HMRC systems. The transition to MTD for businesses should make it easier for businesses to get their tax right, and contribute to wider productivity gains by encouraging further digitalisation.

This research was designed to understand how VAT registered businesses below the £85,000 VAT threshold were impacted by the April 2022 MTD requirements.

This research aimed to provide valuable insight into the experiences of a customer group where HMRC did not have any social research to inform the evaluation, gaining insight into customers’ early experiences in the first year of compliance with MTD requirements. This research also aimed to explore the impact of MTD by understanding any costs and benefits to customers from complying with MTD, including any wider, non-tax benefits that businesses may have experienced.

2.2 Research objectives

This research explored three key themes, with the aim of understanding the early impacts of MTD for VAT for customers below the VAT threshold (£85,000): scope for error, record keeping and general customer experience. These themes encompass a series of more detailed research questions:

What have the costs and benefits to business been in the first year of requirements since keeping records digitally and changing to MTD to submit their VAT returns?
How have costs changed from before the introduction of MTD?
Exploring the use of digital record keeping before and after MTD requirements: have businesses changed their record keeping behaviour since the introduction of MTD?
Do customers feel more/less confident in making their VAT returns since the introduction of MTD?
Are businesses experiencing any wider (non-tax) benefits and can we identify any potential impact on drivers of productivity?
What are the barriers to change among businesses that have transitioned to MTD for VAT?

2.3. Methodology

Kantar Public conducted 50 in depth interviews with businesses below the £85,000 VAT threshold. These were carried out by telephone or video call, according to the participant’s preference, and lasted up to an hour.

Qualitative research such as this study is primarily exploratory and is used to gain an understanding of underlying reasons, opinions, and experiences. Findings cannot be generalised to the wider population.

During recruitment, fixed quotas were set based on the turnover of the business. 15 interviews were conducted with businesses with a turnover of £30,000 or less, 15 with businesses with a turnover of between £30,001 to £50,000, and 20 interviews with businesses with a turnover of between £50,001 and £85,000. This was in order to ensure that a spread of businesses of different sizes within the population were included in the research sample.

Further flexible quotas were set aiming for a spread of businesses in the following categories: time since VAT registration, number of employees, type of software used (bridging or fully functional), digital confidence, sector, region, record keeping prior to MTD, use of an agent and business lifecycle stage. Complete details of the sample frame can be found in the appendix (Appendix 1.1).

Prior to the interview, participants were asked to complete a short pre-task. This task asked the participant about software, costs, and benefits experienced because of the transition to MTD. This pre-task was included to encourage participants to think about the different impacts of MTD on their business and facilitate discussion of this in the interview. The full pre-task document can be found in the appendix. (Appendix 1.2)

A topic guide developed by Kantar Public and HMRC was used in each of the interviews. This consisted of questions and prompts to help guide the interview with participants ensuring that relevant topics for the research were covered. The full text of the topic guide can be found in appendix. (Appendix 1.3)

Question 3

3.  Customer context and views on VAT

Accepted Answer

In this section we will look at some key underlying features of the population of newly mandated customers under the VAT threshold, as well as their attitudes towards VAT, reasons for being registered and any challenges they have.

3.1. Observations on the population

This population of businesses with a turnover below £85,000 tended to have very few employees, if any. They were mostly very small operations where the business owner managed the business books, in some cases with the help of an external accountant. Accountant support ranged from advising on specific issues to supporting everything VAT related.

Related to this, these small businesses managed a low volume of paperwork, tending to have a small number of VAT applicable transactions or purchases. This diminished the burden of VAT record keeping and submission, particularly in comparison to those larger businesses above the threshold.

The participants interviewed tended to be time pressured and carried out financial and other administrative tasks in their own time. The task of tax and VAT management was seen as additional to the core functions of the business, and it was unlikely for a full-time accountant or bookkeeper to be employed. As a result, businesses were less willing to consider investing time and money to enable long term savings.

Across the interviewed population there was a high degree of variability in digital and financial confidence which heavily influenced their ability to manage new software.

3.2. Reasons for VAT registration

A number of businesses interviewed expressed the view that there was an expectation for them to be VAT registered and that the act of registration conferred a status that was essential to doing business. Businesses that sold products and services to other businesses were conscious of the status conferred by being VAT registered and the fact that clients required a VAT number in order to make purchases. This was particularly evident in businesses that sold to companies that operated procurement schemes and required vendors to have VAT numbers when processing purchase orders. One business whose clients were mainly public sector organisations stated that it was a requirement for them to be VAT registered in order to be considered for purchases.

“To invoice and work between businesses you need to be able to get the price without the VAT.” (Full Software User)

“Showing that I’m VAT registered, I think gives it a bit of kudos.” (Full Software User)

“Clients said that it would help in procurement because it looks like you’re a serious business and that kind of thing.” (Full Software User)

“As I was dealing with corporates, if I was VAT registered, it would show that I was a much more mature business, that this guy knows what he’s talking about.” (Bridging Software User)

The other major reason for businesses under the threshold to be VAT registered was a desire to reclaim the VAT charged on large capital expenses. Despite being below the threshold some of these businesses had to make significant standard rated purchases and wished to make a claim as a result.

“At the time the business was just starting up and there were lots of big expenditures, so we could claim back expenses on machinery.” (Full Software User)

3.3. Experiences, advantages and disadvantages of VAT registration

Being VAT registered whilst below the threshold was often a matter of convenience for business owners. They felt that the act of VAT registration simplified matters with clients and suppliers and could help to improve business processes through ensuring smoother sales processes, compliance with procurement requirements and better record keeping practices.

Despite the business convenience of being VAT registered, some businesses voiced frustration at the administrative burden that this placed on them. Since these businesses were small with limited turnover, the administrative burden was less likely to be a significant issue than was seen in research with businesses over the VAT threshold, but it remained a consideration for some.

“I don’t buy a lot of stuff, it’s a bit of a pain but not a big deal.” (Full Software User)

“Because it’s quite straightforward there is little motivation to de-register” (Bridging Software User)

The fact that some businesses experienced additional costs due to the implementation of MTD for VAT meant that certain businesses were considering whether to de-register because of these additional costs.

“I considered deregistering with the MTD transition, especially with the UK work falling off.” (Full Software User)

One of the main factors that ensured that businesses with revenues below the threshold remained VAT registered was the fluctuating nature of business turnover. Some businesses found it difficult to know whether they would remain consistently below the threshold. As such, they found it easier to be VAT registered to ensure that they would not be caught out by varying revenues.

“We are near the threshold and may have to deregister and re-register, so it doesn’t make any sense to deregister.” (Full Software User)

“I registered because I was over the threshold. I’m now under the threshold, and I have considered de-registering. But I’m not sure what benefit it would give me.” (Bridging Software User)

Question 4

4.  The journey to MTD

Accepted Answer

In this section we will explore the journey of the transition to MTD for newly mandated customers. We start by looking at habits prior to the introduction of MTD, followed by participants’ recollections of first hearing about MTD, preparations made and experiences of the transition.

4.1. Experience of VAT submissions prior to MTD

Prior to the introduction of MTD, businesses below the threshold used a variety of methods for VAT record keeping and submissions. Some less digitally confident businesses were still holding paper records and submitting VAT returns on paper. A common method of digital record keeping and managing submissions was the use of spreadsheet software, with submissions then being uploaded to the VAT submission portal (often referred to as the Government Gateway by participants), which was widely used by businesses. Even prior to the introduction of mandatory digital record keeping some businesses were already using fully MTD functional accounting software. This may have been at the request of an accountant who encouraged the business to use such software for ease of integration.

“It was all on paper until recently. Post out an invoice, then file it in a big box file. End of the quarter print out any invoices and reconcile with the invoices I had to pay.” (Full Software User)

“It was just straightforward, taking your numbers, inputting it and submitting it.” (Bridging Software User)

4.2. First hearing about MTD

Businesses interviewed mostly first heard about the introduction of MTD and mandatory digital record keeping directly from HMRC, having received written notification informing them of the requirements.

“There was a lot of communication ahead of time to say, ‘you have to do it, you need to inform yourself and by then you must do it.” (Bridging Software User)

Businesses also heard about the introduction of MTD from those who had already experienced requirements previously and were up to date on the latest implementation. Accountants were a source of knowledge, with many informing their clients of the upcoming requirements. Friends and family were also cited as a source of information regarding the introduction of MTD. Businesses also reported hearing about the implementation from people who worked in businesses over the VAT threshold and had first-hand experience as a result.

“First heard about it in 2021, the accountant told me about it. Initially it was only for those over the threshold, and then I heard about end of 2021 that I would be included.” (Full Software User)

In some cases, participants had pre-existing negative views of the requirements having heard from businesses over the threshold who had negative perceptions of MTD.

“Our best friends are farming, but they’re farming in a much bigger way than us and they complained about it. I thought oh, it’s just for big farms, they’ll let it let us little farms just get on as we were.” (Bridging Software User)

4.3. Preparations made

Once businesses learned of the requirements of MTD for VAT, they tended to undertake several different actions in preparation for the transition.

The first step that many businesses took was carrying out in depth research into the requirements and steps needed in order to comply with mandatory digital record keeping. This research was either conducted by businesses through looking on the internet or talking with friends and family for advice, or by seeking professional advice from accountants and tax agents.

“A year ago, I looked into it in more detail and selected the free software and did a trial with it.” (Bridging Software User)

“It has been three hours spent in total, listening to videos, then deciding that bridging software is the right thing for me to do. And then figuring out which kind of bridging software is either free or seems to be very easy to handle or suitable for me.” (Bridging Software User)

A key element of the preparation for implementing MTD for VAT was deciding whether to use bridging or fully functional software and deciding which brand of software to use. Those businesses that relied on accountants for advice in the preparation of MTD tended to opt for a type and brand of software which was most compatible with, or recommended by, their accountant.

“Once I understood that what they wanted was a software change, I had to decide which one to choose. [software name] was recommended by my accountant, and it seemed to be the only one to offer a free trial, so I went with that.” (Full Software User)

“My accountant first told me about it and put me on [software name].” (Full Software User)

4.4. Experience of first MTD returns

Many of the businesses interviewed experienced some teething problems when first submitting their VAT returns under the new MTD system. However, these initial problems passed reasonably quickly with few businesses experiencing longer term difficulties in submitting MTD returns.

“It was very tedious originally, but over time I’ve got used to it and know how to use the software.” (Full Software User)

“I had to spend probably a couple of days trying to understand how to use the software.” (Bridging Software User)

Many of the challenges that businesses experienced when submitting MTD VAT returns were in adapting to using new software and a new system of record keeping. Once businesses had been able to practise these issues tended to iron themselves out with experience.

“The first time I did it I found it really painful, and it took seven days. The last time I did it, it took me an hour and it will become even easier. I’ve got the template file set up so it will be easier going forward.” (Full Software User)

“Once I get used to it a bit more it won’t seem quite so difficult.” (Full Software User)

4.5. Acceptance of MTD

Following a period of practice and integration of MTD processes in VAT record keeping and submission, businesses tended towards an acceptance of the new systems.

Many of those businesses now using fully functional software reported having updated their record keeping, transitioning away from using paper, spreadsheets and other tools and integrating all of their VAT record keeping into the MTD compatible software. Some businesses reported continuing to use their old spreadsheets alongside fully functional software, as they had previously customised their spreadsheets to suit their business and were reluctant to move away from this. These businesses felt more comfortable maintaining this system during a period of transition whilst they adapted to fully functional MTD software.

“I’m still keeping up my records in [spreadsheet software name] but yes, I might transfer things over when I come to do my yearly plans.” (Full Software User)

“I just let [software name] do the calculation, I just check that everything’s in there that should be and then hit the button to do the return, it tells me the money I’ve got to send, and I’ll just transfer that by that banking app. Super simple.” (Full Software User)

Those who were using bridging software continued to use their spreadsheets and reported little change in the experience of using software in comparison to uploading data directly to the VAT submission portal.

“I don’t need software because this spreadsheet works. And this bridging software is very economical.” (Bridging Software User)

Some businesses recognised that the transition to MTD resulted in more accurate records and VAT returns. Furthermore, there was widespread acceptance that MTD was a natural progression in how VAT should be managed, and a small but noticeable improvement on the previous system. However, some businesses were satisfied with the previous system of record keeping and submitting VAT returns, so often perceived positive impacts as marginal. Some businesses, particularly those that were less digitally confident, winding down the business or users of bridging software were less likely to embrace the benefits of MTD and instead remained sceptical. We will explore this spectrum of views further in Section 7.

“Yes I suppose [MTD has improved accuracy] because before I would be writing and calculating, now there is less scope for errors.” (Full Software User)

“It’s not a massive task anymore. It’s not any more difficult than every week just putting my receipts into the software.” (Full Software User)

“They’ve got you over a barrel really, so I don’t see any advantages. I might be a little bit more comfortable with the whole system in time, I don’t see any other advantages.” (Full Software User)

“It was an inconvenience that took a few hours to work out. The annoying thing is it was just another step. It didn’t seem to make any improvements. and it wasn’t necessary.” (Bridging Software User)

Question 5

5.  The role of software

Accepted Answer

This section will highlight the key role of software in customers’ experience of MTD and how it has been received by businesses under the VAT threshold.

5.1. Influence of software choice on views towards MTD

The decision on whether to use fully functional MTD software or bridging software had a significant impact on the transition that businesses experienced.

Those businesses that used fully functional software tended to be those that had more complicated tax affairs and used an accountant for assistance with VAT. Often the accountant would be instrumental in encouraging the businesses to use fully functional software and the business was open to using software that integrated with their accountant’s system. Fully functional software users also tended to be those businesses that were most willing to embrace digital technologies and were happy to consider updating their record systems and not afraid of change.

In contrast, many bridging software users were likely to have lower digital confidence and to feel unsure about embracing and trying out new digital systems. Many were mature businesses, perhaps looking to wind down, and were less willing to try new systems in the late stages of their career. Businesses using bridging software were reluctant to invest time or money in fully functional software considering their low revenue, simple tax affairs or end stage of the business. As has been seen in previous research, bridging software users subsequently saw few benefits as a result of the transition to MTD.

“I could go a whole quarter and only do 2 invoices, because they’re big. I don’t generate large numbers of invoices that would make full software more useful.” (Bridging Software User)

“Our business is so small. I’m not paying for a couple 100 quid per month for a software.” (Bridging Software User)

5.2. Impact of using software for VAT

The introduction of paid for third-party software introduced a new dynamic for some businesses. Some businesses below the threshold that had previously managed their own record keeping and submitted their own returns incurred a new expense in paying for software. The introduction of this cost caused some resentment among certain businesses.

“My overriding thought was: ‘why is this really necessary when I’ve been doing this for all these years, and everything has been fine’. it just seems to add expense for no additional benefits.” (Full Software User)

An issue in the adoption of software for some businesses was having to engage with customer service of third-party providers. Some businesses reported poor customer service and dissatisfaction at having to deal with a third-party issue that they felt should be resolved by themselves and HMRC. Some businesses experienced difficulty correcting errors with third-party systems and an uncertainty about how this would impact their relationship with HMRC and concern about the potential for fines.

“Once there was a problem with [software name], but it was over the weekend, and I couldn’t get any support. Monday morning it fixed itself and submitted. But I received an email reminder from HMRC because I missed a deadline.” (Full Software User)

Those businesses that had difficulties with their software felt that the requirement to use software had created a new barrier between themselves and HMRC. The previous system was viewed positively by many, and they felt they had direct contact with HMRC who would be able to resolve any issues.

“It’s just extra steps with the new system. I was happy with the previous system. If there were any issues with submitting the VAT return via the website HMRC would be aware of it. If there is trouble with 3rd party software, they might not be aware of that.” (Full Software User)

The introduction of third-party software to the process also created the possibility of negative brand perceptions. The experience of VAT record keeping, and the submission process was in part viewed in the light of the brand of software chosen by the business. Negative experiences with software brands could impact how businesses viewed MTD and as a result their views towards HMRC.

“The headache was getting used to [software name]. I definitely had some teething issues.” (Full Software User)

In such instances, the introduction of software created a barrier between businesses and HMRC that did not previously exist. Where some businesses previously felt as though they were interacting directly with HMRC when submitting VAT returns, they now felt as though there was an intermediary acting between themselves and HMRC and some resented this.

“I used to submit it on the government website. Now, I just have to go through an intermediary website.” (Bridging Software User)

Whilst some businesses felt that the introduction of new software created a barrier with HMRC and resented the new expense, some businesses experienced benefits as a result of the introduction of software such as improved accuracy and time saving when submitting VAT returns. The following section will go into more detail on the full benefits of the transition to MTD and introduction of MTD functional software for businesses.

Question 6

6.  The benefits of MTD for VAT

Accepted Answer

In this section we will outline the key benefits of MTD and explore the different ways businesses have benefitted from the transition.

The benefits discussed in this section were primarily experienced by businesses that embraced fully functional MTD software. Businesses that used bridging software tended not to identify any benefits.

6.1. Greater accuracy

It was a widely held view of businesses below the VAT threshold that one of the key benefits of the introduction of MTD was an improvement in the accuracy of record keeping.

Businesses that used fully functional software reported that whilst accuracy was not previously a major concern, they had such trust in the software that they believed their VAT record keeping was more accurate than before and reduced the likelihood of human error. The integration of VAT records and VAT submissions also ensured that businesses felt more confident when submitting.

Some businesses that previously used accountants to review VAT submissions no longer felt the need to do so, as they perceived the records and submissions as being more accurate and aligned due to the software. Some also saw the improved accuracy in VAT because of MTD and were inspired to implement new and improved processes across other areas of the business.

“There is a lot of robustness in place to make sure you are not going wrong.” (Full Software User)

“I’m much more confident in what I’m submitting. Because all of the figures are automatic, there is less room for error.” (Full Software User)

“I think that’s one thing that will be more accurate, before you could have made a mistake before and they never noticed. Whereas now, I don’t think it’s possible.” (Full Software User)

“With the increased digitalisation there’s literally no likelihood of miscalculation.” (Full Software User)

6.2. Record keeping

The transition to MTD encouraged businesses to adopt new and improved record keeping methods. Businesses that were previously using paper had moved to using digital records and, in some cases, to using fully functional software. Some of those using fully functional software reported such positive results with the digital record keeping in the software that they adopted it more widely across the business.

“I now use a bespoke bit of software for VAT which produces invoices and keeps a record.” (Full Software User)

“MTD was the driver for the change in how we keep accounts.” (Bridging Software User)

Businesses using full software reported improved accuracy in their record keeping because of MTD, saving time and money as well as increasing confidence and peace of mind.

“You can just check and have that peace of mind, rather than having to dig through files to check back.” (Full Software User)

The positive experience of VAT record keeping with full software encouraged businesses to evolve their record keeping practices in other areas, whether transitioning away from paper and into digital or expanding the adoption of digital software and practices.

“I have been uploading bank statements digitally now too, which is new. Saved us a trip to the accountant. And improved other digital parts of the business.” (Full Software User)

6.3. Time saving

Some businesses that embraced fully functional software experienced marginal time savings because of the transition to MTD. Given the small nature of these businesses, the time spent on the previous system had been minimal, and therefore any time saved in the new system was negligible.

“Certainly half an hour saving if not the best part of an hour. It probably saves an hour each quarter.” (Full Software User)

However, some of those businesses interviewed experienced substantially increased productivity as a result of the time saved from MTD. Those businesses that spent significant time preparing and submitting VAT returns previously, subsequently found this time was greatly reduced with MTD fully functional software. This allowed for time to be spent elsewhere, such as increasing revenue streams or other areas of business development.

“It’s made me more productive, as spending less hours to reduce cost. I have more time to spend on other things and spend less time on reconciliation.” (Full Software User)

6.4. Financial benefits

The businesses that saw financial benefits as a result of the transition to MTD were largely those that had taken on fully functional software and had previously used accountants to help with their VAT returns. The software aided the business and reduced the amount of assistance from an accountant needed to manage VAT. As a result, this saved accountancy time and money, enabling accountants to aid the business in other areas.

“I’m hoping that it will allow the accountants to advise us a bit better about how we spend money over the year. We might save some tax as a result, hopefully.” (Full Software User)

Some businesses experienced increased financial confidence due to feeling a higher degree of certainty about VAT record keeping and returns. There was a feeling that details were easier to access and reliably accurate, helping to build a sense of certainty in the business’s finances.

“It is much easier that everything is in one place, and you can quickly see how much you’ve got coming in and out, and you know your position better.” (Full Software User)

6.5. Wider benefits

For some businesses MTD for VAT led to significant increased digitalisation in other areas of the business, both in finances and record keeping, but also in the broader business operations. Businesses that used fully functional software were likely to use the same software for other financial management tasks, and some felt particularly positive about the experience and were encouraged to introduce new software for other areas.

The increased digitalisation that businesses saw because of the introduction of MTD led to other areas of the businesses benefitting. More accurate record keeping was something that led to positive outcomes across the business, not just in finance and tax, but with stock accountability and administrative improvements.

Integration between invoicing, finances and other tax systems was one of the key business areas where MTD software led to further gains for businesses. The positive experiences with fully functional software encouraged businesses to match the consistency and accuracy in finance and other areas of the business.

“It has prompted me to move to software and set up automated invoices – making it much easier.” (Full Software User)

“It has encouraged broader digitalisation of other areas of the business. It’s modernised our way of working and made us more organised and efficient. It’s better for business if you are up to date.” (Full Software User)

The transition to MTD for VAT also resulted in some positive emotional benefits for certain businesses, with some full software users reporting less stress and greater confidence as a result of the transition.

“I find it a little less stressful, knowing it’s all in the one place and knowing I’ve got most of the information on my phone.” (Full Software User)

Question 7

7.  The costs of MTD for VAT

Accepted Answer

In this section we explore the costs that businesses experienced in the MTD transition, including financial, time and emotional costs.

Most businesses that embraced fully functional MTD software experienced financial costs, whereas for many bridging software users there was limited financial cost due to choosing free bridging software (although some did pay for this). The other costs discussed apply to both businesses using fully functional software and businesses that used bridging software.

7.1. Financial costs

Many businesses reported that the biggest cost of the implementation of MTD for VAT was the financial cost of adopting fully functional software. Whilst businesses recognised that software costs did not represent a significant amount of money, amongst those who had been happy under the previous system there was some resentment at having to pay any costs.

“The new system is frustrating, and you feel like you’re being ripped off. I couldn’t see what the upside is. I’m already doing everything digitally. I still don’t particularly understand what was wrong with the old system.” (Full Software User)

There were additional financial costs incurred by businesses that were less confident in their financial or digital management due to further usage of accountants or agents. Some had to incur costs in paying for time their accountant spent training them and helping them to complete VAT returns under the new system.

“I did a training session with my accountant that ran to about £500.” (Full Software User)

7.2. Time costs

Some businesses found that adapting to a new method of record keeping proved to be a tricky exercise that took time. Learning to use new fully functional software and adapting to new systems resulted in some businesses saying they spent more time on record keeping than before. Some bridging software users also experienced challenges in the set-up phase, as they integrated their spreadsheets with the new MTD compatible bridging software.

“It’s been more time consuming than the old gateway system and there is a cost there. It’s something that is completely unnecessary.” (Full Software User)

“The main cost is time, it took two days to get everything set up.” (Bridging Software User)

The new method of submitting returns also resulted in some businesses taking longer and experiencing a time cost as they struggled to adapt to a new system. Whilst less frequently a cause of additional time expenditure than new record keeping methods, this was still an area of concern for some businesses who found the previous system had worked well.

“I spent a lot of time going through checking and double checking it, going through the rules again. I wanted to get it right and wasn’t familiar with the software, in many ways it wasn’t that difficult and subsequent returns will be easier, but I was worried about pressing the wrong button.” (Full Software User)

These time costs that some businesses experienced in the transition to MTD were sometimes seen as transitional issues that would ease as they became better acquainted with the new system.

“At first it took me a long time because [software name] didn’t make sense, but I’ve got used to it now.” (Full Software User)

7.3. Emotional burdens

The adoption of new software resulted in some teething pains for those businesses who were less digitally confident. These businesses were more often anxious about changing methods of record keeping and submitting returns and were more likely to be at the end of their business cycle.

“There is stress and anxiety, I don’t know how to use the software.” (Bridging Software User)

Amongst some businesses there was disappointment at the time needed to set up the new system of reporting and paying VAT. Businesses that felt their previous system worked well, having put hours into making this work with customised spreadsheets, resented having to spend additional time setting up a new system for the sole purpose of paying taxes.

“The longest bit was going through all the different companies and reviewing all the different options for software, whether to convert a spreadsheet or whether it is best to get the software. I spent about 3 weeks on and off preparing.” (Full Software User)

As with time costs, there was an anticipation that the emotional burden of transition would ease over time.

Question 8

8.  Customer outcomes

Accepted Answer

In the analysis of the different experiences that businesses had in the transition to MTD, we categorised these businesses into four distinct groups based on how the transition to MTD had impacted them. These were: businesses for whom MTD had a negative impact, businesses for whom MTD had a limited impact, businesses for whom MTD had slightly positive impact, and businesses for whom MTD had a very positive impact.

In this section we explore each of these outcomes. To help bring these to life, we have included pen portraits for each category. Please note that all names have been changed and any personal identifying information has been removed.

8.1. Businesses for whom MTD had a negative impact

This group of businesses experienced financial, emotional and time costs because of MTD, without perceiving any tangible benefits. They were more likely to use bridging software or if they were using fully functional software, they were struggling with it. These businesses tended to be less digitally confident and more likely to be nearing the end of the business cycle rather than in a position to grow.

Customer who is unhappy with forced transition in late career

John is 65. He is the sole director of a limited company, a consultancy in the telecoms industry. He has managed the company finances using spreadsheets in the past with his accountant helping on occasion when necessary. John is thinking about retirement and is resentful about learning a new system in which to record VAT, as such he has selected bridging software to ensure he can continue to use his spreadsheets but is frustrated at having to adjust these to be compatible.

Customer who lacks knowledge and feels forced into software

James is 43 and runs an energy business. Lacking in financial confidence he has previously relied on his accountant to assist with submitting VAT returns and other financial matters. With the transition to MTD, he purchased full software as it was recommended by his accountant. He is struggling to use the software, sees it as unnecessary and resents the additional charges that he incurs due to the software and increased accountancy time.

8.2. Business for whom MTD had a limited impact

These businesses either used full software and experienced a balance of costs and benefits, or they used bridging software and did not experience any costs or benefits. They tended to be comfortable with spreadsheets and their previous methods of record keeping and VAT submissions.

Customer who weighs up the costs versus marginal gains

Helen is 55. She runs an accountancy business with her partner. As an accountant and someone who is very confident in financial matters and tax affairs, she does not feel overwhelmed by the change to MTD but struggles to see significant benefits. Helen purchases fully functional software and slightly resents the increased cost, but appreciates the system is now more seamless and takes marginally less time.

Customer who is adapting to bridging software

Nadine is 34 and runs a cake making business. Prior to MTD she managed her financial record keeping and VAT submissions using spreadsheets and the VAT submission portal. Since the transition to MTD she has downloaded bridging software at the recommendation of her accountant. She is neutral towards the software, not experiencing significant benefits or drawbacks.

8.3. Businesses for whom MTD had a slightly positive impact

This group of businesses experienced slight gains in ease, time saving and accuracy as a result of MTD for VAT. They were likely to be fully functional software users and tended to be both digitally and financially confident. Some were already experienced users of accounting software.

Customer who is happy to be moving with the times

Bill is 67 and runs a consultancy that organises maritime events. He says it is important to embrace new technology and was already an enthusiastic user of full software before MTD. He loves the transparency and accuracy of record keeping and returns under MTD, and the peace of mind this gives him, allowing him to focus on the business without worrying too much about the accounts. The slight amount of time shaved off submitting returns is an added bonus.

Customer who anticipates future benefits

Aaron is 37. He is the founder of a tech platform that connects female tradeswomen with customers. Having used full software since setting up the business he found the transition to MTD seamless. He appreciates the ease of submitting returns now and the complete confidence he has in their accuracy. He expects both of these benefits to become more significant to him as his business grows – he is set to pass the VAT threshold very soon. But he can’t imagine MTD having an impact on any other aspect of his business.

8.4. Businesses for whom MTD had a very positive impact

These businesses experienced significant improvements to record keeping and financial confidence and may have also experienced wider benefits to the business as a result of the transition to MTD. They had become full software users since the introduction of MTD, having previously not used accounting software. This group tended to be businesses thinking about growing the business rather than winding down.

Customer who embraced the move from paper to digital

Sara is 45 and runs a construction company with her partner. They have 2 part time staff and are expanding the business over the next 18 months. Sara is happy with the changes that MTD has brought in. Having previously used paper records and conducted most business with physical paperwork the switch to digital has led to increased financial confidence, greater accuracy, and digitalisation elsewhere in the business.

Customer who improved business’s financial systems

Hasan is 62 and runs a growing cinematography business. Due to having a large amount of paperwork and record keeping to conduct, Hasan is grateful for the improvement in financial record keeping that has happened as a result of using full MTD software. The positive experience with the software has led to utilisation in other financial areas of the business and improved financial systems.

Customer who digitised inventory because of MTD

John is 52 and manages a livestock farm. Since the introduction of MTD for VAT he has seen benefits in financial record keeping and embraced the ease of the process. This positive experience has encouraged John to look at digitalisation in other areas of the business, in particular the introduction of digital tagging systems for monitoring farm animals.

Question 9

9.  Conclusions

Accepted Answer

9.1. Comparisons with businesses over the VAT threshold

To help contextualise this research in the broader MTD evaluation framework, it is helpful to consider how businesses below the VAT threshold compared in their experiences with those above the VAT threshold.

9.1.1. Financial Implications

These low turnover businesses under the VAT threshold were more likely than high turnover businesses to reference the financial cost of purchasing software and the broader transition to MTD.

Whilst the financial cost of software for such businesses remains minimal, due to the low turnover nature of these businesses, for some paying a small monthly fee was capable of triggering some slight resentment.

9.1.2. Varied digital experiences

As with those businesses over the threshold, the experience of businesses under the threshold in transitioning to MTD varied greatly depending how open the business was to greater digitalisation of their systems.

Accordingly, those businesses that embraced fully functional software rather than using bridging software were much more likely to have had a positive experience from the transition.

9.1.3. Administrative burden

The administrative burden of VAT prior to MTD was much lower for businesses below the threshold who tended to have far fewer VAT applicable transactions.

However as with those over the threshold, one of the biggest burdens in the transition to MTD was the process of researching and implementing the new system. Once the new system was in place and businesses had practised using it, the burden tended to decline and was either comparable to the prior system or perceived to have reduced.

9.2. Key findings

9.2.1. Volume of transactions

Businesses below the VAT threshold tended to be low volume businesses that rarely had many purchases or invoices to issue. As such VAT was not seen as a huge burden, and there was a high degree of satisfaction with the previous system of record keeping and VAT submission. VAT registration was often driven by the status it conferred as much as the need to claim on a large number of expenses.

9.2.2. Introduction of software

Almost all businesses interviewed changed their record keeping as a result of the transition to MTD, with very few businesses already using fully functional MTD software. This introduction of third-party software for many created an unknown element in the VAT process, with experiences of MTD highly dependent on how positively the software packages were received.

9.2.3. Software journey

Similar to those businesses over the VAT threshold, the journey of software use had implications for how the cost and benefits of MTD were perceived. For full software users there were financial costs, but far greater potential for benefits. Bridging software users avoided financial costs but had very little opportunity to benefit and important emotional and time costs were still applicable.

9.2.4. Benefits of MTD transition

Most benefits of the transition to MTD were experienced by fully functional software users with bridging software users unlikely to experience many of the benefits.

Greater accuracy of VAT record-keeping and returns was a key benefit for customers using fully functional software. Furthermore, the improved VAT record keeping sometimes led to improvements in record keeping in other areas of the business.

Some businesses using fully functional software reported experiencing time savings as a result of using MTD. Businesses that had previously spent some time preparing and submitting VAT returns found this time was reduced with the introduction of MTD and fully functional software.

Businesses using fully functional software also occasionally reported seeing financial benefits as a result of the transition to MTD, in particular businesses that had previously used accountants to help with VAT returns, but no longer needed to.

9.2.5. Wider benefits of MTD

Some businesses that used fully functional software also experienced wider benefits outside of tax. These included some financial savings due to less reliance on accountants, as well as greater financial confidence. There were also businesses that increased digitalisation across their business, both in financial processes and in wider business operations.

9.2.6. Costs of MTD transition

The financial costs that businesses experienced mainly related to the cost of full software and for some businesses the potential for additional accountant support to deal with the new system.

In addition, some businesses experienced time related costs due to having to adapt to new methods of record keeping and submitting VAT returns.

Some participants reported emotional costs from the transition to MTD, in particular relating to the anxiety of using new software and some resentment at the burden of system change.

[1] https://www.gov.uk/government/publications/research-to-assess-the-impact-of-making-tax-digital-for-vat/assessing-the-impact-of-making-tax-digital-for-vat

Question 10

10.  Appendix

Accepted Answer

10.1 Sample achieved

Sample population	Interviews achieved
Turnover
£30,000 or less	15
£30,001 - £50,000	15
£50,001 - £85000	20
VAT Registration Time
1 - 4 years	17
5 - 9 years	12
10+ years	21
Number of Employees
0 employees (e.g. sole trader)	11
1 - 9 employees	39
Software Type
Fully functional software	30
Bridging software	20
Digital confidence
Low confidence	6
Medium confidence	18
High confidence	26
Sector
Professional, Scientific and Technical Activities	16
Wholesale and Retail trade; Repair of Motor Vehicles and motorcycles	3
Construction	4
Manufacturing	4
Administrative and Support Service Activities	4
Transportation and Storage	1
Agriculture, Forestry and Fishing	5
Arts, Entertainment and Recreation	6
Real Estate Activities	5
Other Service Activities	1
Electricity, Gas, Steam and Air Conditioning Supply	1
Region
Greater London	9
South East	7
South West	4
West Midlands	4
North West	2
North East	2
Yorkshire and the Humber	4
East Midlands	7
East of England	3
Scotland	2
Wales	4
Northern Ireland	2
Record Keeping Prior to MTD
I used fully functional software	8
I used spreadsheets / paper	42
Use of Agent
I use an agent to help with VAT returns	5
I use an agent to help with other tasks	29
I do not use an agent	16
Business Lifecycle
Start-up / Growth ambitions	17
Maturity / exit or decline	33

10.2 Pre interview task

Impact of Making Tax Digital for VAT Research Preparation Exercise

Please complete this as accurately as possible before your scheduled telephone interview. You do not need to return this form but please ensure you are able to refer to it during the interview. Please try to answer each question as accurately and with as much detail as you can. Your answers will be kept anonymous and confidential.

Thank you for participating.

Have you incurred any costs (financial or otherwise) because of transitioning to MTD for VAT?

If so, please outline any financial costs you have incurred
Please outline any other costs you have incurred (e.g., time, training etc.)

If you use software to capture your receipts in addition to your VAT software, what is the overall cost of this?

Have you experienced any benefits for yourself or your business because of transitioning to MTD for VAT?

If so, please outline these benefits

10.3. Topic Guide

1. Introduction (2 minutes)

To introduce participant to the research, answer any questions and reassure on confidentiality.

Thanks & Introduction: Introduce yourself and Kantar Public – independent research agency
About the client: Research on behalf of HMRC
Purpose of discussion: We are going to be discussing their approach to managing VAT with a particular focus on how they have found the transition to Making Tax Digital (MTD)
How their information will be used: Their views and experiences will be looked at together with views of others taking part in interviews across the country. These views will be analysed by theme then a report written based on those themes
Ethical considerations: Anonymity, confidentiality, voluntary participation
Duration: maximum of 1 hour
Reassurances: No right or wrong answers - we are simply asking for people’s views
Reminder about audio recording: The discussion will be recorded so that we can accurately capture their views, and so researchers can listen back when analysing the data. The recorder is encrypted and only the research team will have access to the recordings, data will be deleted within 12 months of the interview
Any questions/concerns?
Start recording: Acknowledge consent for being recorded

2. Background and context (5 minutes)

This section will provide context to aid analysis. Understanding participants’ attitudes to growth, innovation and digital confidence will aid in analysis of views of MTD for VAT.

Ask participant to introduce themselves

Role, length of time in business

Ask to introduce business

Ask to introduce the type of business and sector
What are the key business priorities/future plans?

Involvement in the business’ finances and record keeping

Describe their role and responsibilities regarding finances and record keeping, level of seniority in business
Overall confidence in managing their business finances and record keeping

Digital confidence

Related to finances
Probe for: online banking; invoice generation; pursuing payments, wider financial management
In other areas of the business

Exploring positive change

Any changes to the way they run their business over the last year which have had a positive impact
Why made this change
Moderator to listen out for language used and benefits mentioned

3. Introduction to VAT (5 minutes)

To understand perceptions of VAT and views on VAT registration and day to day management.

Moderator to explain that we are going to focus the discussion about their experiences of VAT
Introduction to topic of VAT
What are the first words that come to mind when thinking of VAT?
Probe for each of the following: Positives, Negatives, Concerns / Anxieties

VAT registration

Confirm time since registration
Reasons for registration
Perceived advantages
Any disadvantages
Have you considered de-registering for VAT, if so, why?

Challenges of keeping VAT records

What and why?
Will challenges change over time and why?

Challenges of VAT returns

What and why?
Which is the most difficult/concerning and why?
Will concerns lessen/increase over time – why?

Moderator note: Listen out throughout for any spontaneous references to MTD, make a note of these to revisit and probe further

4. Journey mapping transition to MTD (15 minutes)

To understand the journey of businesses when transitioning to MTD for VAT. To uncover key pain points, and any areas where they have experienced benefit across the process. How did the experience compare against their expectations, on areas including cost and time?

Moderator note: Throughout the rest of the guide, discuss the participant’s experiences of transitioning to MTD for VAT - establish rough timings for each stage and record this on the map

Moderator note: Introducing the journey map

Tell the participant that we will be creating a journey map to understand their experience of transitioning to MTD. This map will be used to establish relative timings of key events and can be added to or amended throughout the discussion.

In July 2020, it was announced that all VAT registered businesses would have to file digitally through Making Tax Digital after April 2022
In April 2022, MTD for VAT was mandatory for all VAT registered businesses
In November 2022, the online portal for VAT returns in the legacy system (pre-MTD) was closed to almost all businesses

Moderator to explain that we are going to focus on switching to MTD and the experience of using MTD for the rest of the discussion.

Record keeping practices prior to MTD

What were the main practices?
How satisfied were they with these practices?
How confident were they under the previous system?
Time spent on VAT record keeping. How frequently would they update records?
Time spent on submitting VAT returns.

Transitioning to MTD

When/how did they first hear about MTD? What did they hear? Where did they hear it from?
When/how did they first hear about the requirement of MTD for VAT registered businesses below the threshold in April 2022? How clear was what they had to do? And by when? Do they remember receiving comms from HMRC?
Initial reaction to MTD
Anticipated impact of transition
Preparation – what/how, how long?

Current record keeping practices

Has this changed since MTD - how/why?
Positives/negatives
Any challenges

Making their first digital return

What words would they use to describe the experience?
Positives/negatives of process
Expectation versus experience

[For those using bridging software]

What is their reason for using bridging software?
Positives /negatives of software usage
The main barrier to using fully compatible MTD software

[Following asked of all]

Filing their first digital VAT submission under MTD

What words would they use to describe the experience?
Positives/negatives compared to previous process

Expectations for future MTD for VAT submissions and filings

What lessons have been learned?
Differences now compared to first return
Expectations for future returns
Has agent use changed?

Perceptions of the transition looking back

What was the overall experience of the transition?
Expectations versus experience
Positives and why
Negatives and why

Biggest change as a result of transitioning to MTD

Changes to record keeping
One-off financial costs
Ongoing financial costs
Time/process burden/administration
Stress/wellbeing/productivity
Use of agents
Training staff in MTD
Upgrading hardware

Focus on costs - ask participant to refer to pre-task

Explore the amount they have spent/are spending on the transition to MTD for VAT
What do they get for that money?
Reasonable/unreasonable – explore
Worthwhile, value for money / not – explore
If not covered spontaneously, probe feelings about the cost of software
How did they select this software?
Did they consider cost versus benefits?
[If using receipt capturing software] – does this help/add value or not?

5. Reflections on the impact of MTD (20 minutes)

Focusing on key areas of impact, using statements to stimulate discussion and aid participants in articulating the benefits

What costs (financial), if any, has MTD for VAT led to?

Initial costs
Ongoing costs
[FOR THOSE USING BRIDGING SOFTWARE] Do these differ for record keeping and returns?

Other costs that came as a result of MTD for VAT?

Emotional, time costs etc.
Are these transitional or ongoing?
Do these differ for record keeping and returns?

What benefits, if any, has MTD for VAT led to?

Would they have had this benefit anyway or only with MTD for VAT being mandatory?
Do they expect more benefits to emerge as familiarity builds? Why/why not
Benefits related to record keeping
Benefits related to submitting VAT returns

If not mentioned, probe for wider benefits of MTD for businesses

Have there been any benefits for the business outside of tax?
Increased digitalisation in other areas of the business?

Any other productivity changes in the wider business as a result of MTD or becoming more digital?

Moderator to explain we have some areas which we have identified as having been impacted by MTD for VAT which we would like to explore.

Improved Record Keeping

Has MTD for VAT had an impact on record keeping at your business?

Moderator to read: “MTD for VAT has driven improvements to businesses’ record keeping methods.”

Spontaneous reaction to the statement
Does it reflect your experiences, why/why not?
Probe on the following areas: What has changed because of MTD? Impact of changes; Would change have happened anyway? If so, what was the driving force behind that change? Digital record keeping in other areas; Impact on financial understanding; Improved your understanding of business finances? E.g., has going digital improved your understanding of what you can afford / your ability to invest in the business?

Greater Accuracy

Has MTD for VAT had an impact on the accuracy of records and VAT returns at your business?

Moderator to read: “MTD for VAT has helped to reduce the scope for error when preparing and submitting VAT returns.”

Spontaneous reaction to the statement
Does it reflect your experiences, why/why not?
Probe on the following areas: Fewer errors, if so why? How do you know? E.g. software prompts; Financial implications; Time implications

Greater Ease

Has MTD for VAT made it easier or more difficult to file VAT returns?

Moderator to read: “MTD for VAT has helped make filing VAT returns easier than before.”

Spontaneous reaction to the statement
Does it reflect your experiences, why/why not?
Probe on the following areas: What steps are easier/harder?; Financial and time implications of being easier/harder

Productivity and Time Saving

Has MTD for VAT had an impact on productivity at your business?

Moderator to read: “MTD for VAT saves time ensuring that I /my team have more time to spend on other things.”

Spontaneous reaction to the statement
Does it reflect your experiences, why/why not?
Probe on the following areas: Amount of time saved/lost; Set up time versus ongoing time; Other areas that benefit due to time saving; Able to spend time on other areas of business?; Impact of time saved on other areas of life?

MTD as Catalyst for Change

Has MTD for VAT resulted in changes elsewhere in your business?

Moderator to read: “Changes made because of MTD for VAT have inspired my business to think about how to make other processes more efficient.”

Spontaneous reaction to the statement
Does it reflect your experiences, why/why not?
Probe on the following areas: Areas of the business that have changed as a result of MTD, costs and benefits of those changes; If not relevant, reasons for not impacting other areas; Use of software/digitalisation

Financial Confidence

Has MTD for VAT had an impact on your financial confidence?

Moderator to read: “MTD for VAT has helped some me/my business to feel more in control of my/our business’ finances.”

Spontaneous reaction to the statement
Does it reflect your experiences, why/why not?
Probe on the following areas: Increased understanding of VAT; Better understanding of cash flow; Improved invoicing; Change in confidence over time, immediate or gradual; Impact of increased financial confidence

Digital Confidence

Has MTD for VAT had an impact on your digital confidence?

Moderator to read: “MTD for VAT has made me /my business owners feel more confident in digital processes.”

Spontaneous reaction to the statement
Does it reflect your experiences, why/why not?
Probe on the following areas: New digital tools used; Areas of the business impacted; Potential future impact

Moderator to read: “MTD for VAT has led me /my business to increase digitalisation of other areas of the business.”

Spontaneous reaction to the statement
Does it reflect your experiences, why/why not?
Probe on the following areas: New digital tools used; Areas of the business impacted; Potential future impact

Cost saving

Moderator to read: “My/Our business has found that MTD for VAT has saved me/us more money than it has cost us.”

Spontaneous reaction to the statement
Does it reflect your experiences, why/why not?

6. Costs and benefits of MTD (5 minutes)

To understand the overall perceptions of MTD costs and benefits, what are the most important factors related to the transition and whether it has been net positive or negative for the business

Biggest challenges of MTD transition

What were these challenges?
Why were these challenges key?
Challenges during the set up or ongoing challenges

Cost outlay required to transition to MTD versus the benefits

What is the biggest benefit?
On balance, do you think it’s been good for you/your business and worth the transition?
Are there any changes that could be made to improve the cost/benefit ratio for the transition?
What, if any, costs and benefits do they anticipate in their future usage of MTD for VAT?

If no benefits have been experienced, ask to imagine a business who would experience benefits from MTD for VAT

Describe this business and their circumstances – how are they different?

7. Close (3 minutes)

Final thoughts / comments
Explain incentive process
Thank and close

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1. Executive Summary