A new cartoon character called Dexter the Digital Tax Advisor has been unveiled by Xero to put a friendly face to the upcoming Making Tax Digital for VAT legislation. Dexter will star in a series of short videos to help accountants and small businesses prepare for one of the biggest business transformations in decades. This follows analysis which has found that with less than five months to go until the legislation comes into force, a quarter of small business owners (25 per cent) are still unaware of the legislation.
Commissioned by Xero, the Dexter the Digital Tax Advisor cartoon series has been animated by the Oscar-nominated creative duo Alison Snowden and David Fine, with a teaser revealed to a crowd of more than 3,000 at Xerocon London this week.
From April 2019, every VAT-registered business above the £85k threshold company in the UK will be required by law to go digital and file their tax through MTD compatible cloud software. Heralding a new era of digital tax, a fifth of (22 per cent) small business owners said they thought digitally submitted tax returns could cut between 6 and 10 hours from the process yearly.
But despite this, the analysis showed that there is still a lack of understanding amongst the small business community. Despite the new legislation rapidly approaching for the 1.1m small businesses operating above the VAT threshold, almost a third of small business owners (29 per cent) admitted having heard of the legislation but not understanding anything about it, while 36 per cent said that the only thing they know about the legislation is the April 1st landmark when Making Tax Digital for VAT begins.
Furthermore, over a third of small businesses (38 per cent) are concerned about the complexity of the switchover in the coming months, while the same number (38 per cent) have concerns due to a lack of understanding and knowledge about the legislation. Just 23 per cent of small business owners know that MTD will be compulsory for all businesses in the future, while less than a third (29 per cent) understand the penalties associated with non-compliance.
The animated series of short films starring Dexter the Digital Tax Advisor will be released in the lead-up to the MTD for VAT kick-off date. The character has been launched to concentrate minds ahead of the shake-up, showing accountants and businesses how easy it is to make the switch to digital. Given that tax has historically been viewed as a highly tedious task – a quarter of SMB owners (23 per cent) name submitting VAT as the job they enjoy the least – Dexter’s mission is to highlight the benefits in efficiency and offer peace of mind in the months ahead and beyond.
Dexter the Digital Tax Advisor launches as Xero announces it is officially ready for Making Tax Digital as well as thousands of Xero accounting partners. As a HMRC approved supplier for Making Tax Digital for VAT, Xero’s new VAT functionality is now in public beta and is completely compatible for Making Tax Digital for businesses over the VAT threshold.
Damon Anderson, Director of Partner and Product at Xero says: “Making Tax Digital is going to usher in a new era of accountancy, encouraging the technology adoption and working practices to bring the profession into the 21st century. Our data has shown that there are huge numbers of small businesses who still feel unprepared for the legislation, so we’ve created Dexter the Digital Tax Advisor to be the voice of Making Tax Digital for VAT and help accountants and small businesses on their digital journey and make tax less taxing.
MTD is just the start of technological innovation for the world of accountancy. It’s going to drive widespread adoption of digital technology, introducing new innovations, such as AI and automation. And at the core of this, we’ll see accountants experiencing a technological and cultural shift, in which paper and outdated desktop software will be replaced with the latest digital technology equipped to evolve with new legislation.”
For further information on Making Tax Digital for VAT visit Xero’s Making Tax Digital hub.