One in five firms are not using digital tax platforms because they lack confidence in their digital skills.
The same proportion believes that poor broadband will be a barrier to complying with Making Tax Digital obligations, according to new research from Ipsos Mori for HMRC.
The findings come as a new report from the Federation of Small Businesses shows one in four (26 per cent) small business owners in England lack confidence in their basic digital skills, hampering national productivity.
The HMRC research finds that seven in ten businesses and landlords (70 per cent) are unaware of the forthcoming rollout of MTD and a third believe making quarterly digital tax returns will be difficult.
Responding to the findings, FSB national chairman Mike Cherry said: “The Treasury has listened to the small business community by ensuring digital tax reporting is optional for the smallest firms for the foreseeable future.
“Providing additional exemptions for firms that remain digitally excluded also shows that the Treasury has heard our concerns.
“This new report highlights how much work is needed to enable the small business community to reap the benefits of digital tax reporting.
“We know that a lack of digital skills within small firms is proving a barrier to growth across the UK – it could also threaten the successful take-up of MTD.
“The fact that so many firms don’t even know MTD is on the way is a real concern. Clearly, there needs to be a big push to get the message out there.
“The 2019 deadline for VAT-registered firms is fast approaching. Filing VAT returns online will present a significant challenge for many so it’s vital that support for these businesses is prioritised over the next eighteen months.
“A successful future roll-out of MTD rests on the success of those who fall into the scheme from 2019. All of those registered for VAT should now be told their obligations, in full.
“Voluntary roll-out for other smaller businesses will come about through highlighting individual cases of businesses that have made a success of it. That way, other businesses will choose to opt-in when they’re ready.”