According to ICAEW’s research, 75% of businesses do not currently maintain their accounts electronically using accounting software.
However, the government plans to force businesses to keep their tax records digitally and publish quarterly reports to HMRC.
ICAEW warned these plans could translate into a greater burden to businesses, mostly on those in the manufacturing and construction industries, where 41% still reply on pen and paper based records.
Nevertheless, more than half (55%) of businesses support HMRC's move, but only 18% feel it should be mandatory.
Paul Aplin, chairman of ICAEW’s technical committee, said, “We fully support HMRC’s ambition to increase the use of digital technology to make meeting tax obligations more straightforward.”
But he suggested the changes should be a matter of choice for business owners, not mandatory.
“Businesses should be able move to the new system over time when they are ready. Government claims that these proposals will contribute to reducing business tax compliance costs by £400m, but we fear that many small businesses will in fact face additional costs when digital record keeping is made mandatory.”
ICAEW said the government is yet to disclosure details of its “Making Tax Digital” plan and how it would work in practice.