Just two per cent of Cumbrian businesses have registered for Making Tax Digital ahead of its introduction on Monday.

Figures obtained by Carlisle-based accountants MoynanSmith from HM Revenue & Customs (HMRC) show that just 362 Cumbrian firms have completed their registration.

It is a tiny fraction of the businesses in the county affected by the change – with 15,948 VAT registered businesses in Cumbria.

For VAT periods from April 1, most businesses above the VAT threshold will need to keep their records digitally and submit their VAT return using MTD-compatible software.

Making Tax Digital is being introduced with the aim of reducing errors, streamlining tax systems and providing HMRC with more accurate information.

The compulsory service has been designed to reduce the time businesses spend on administration and make it easier for them to get their tax right.

The Cumbrian figures mirror the national picture according to HMRC, with just 2.4 per cent of the UK’s 1.2 million businesses required to register for MTD had done so by March 4.

Darren Moynan, of MoynanSmith said: “It has been a big surprise to discover that the number of businesses in Cumbria that are signed up for the new tax system is so low, considering the deadline is so soon.

“I think that many people may not realise that it is compulsory and are unaware that it applies to their business, or they may be under the assumption that they are already set up for it.

“It is important that your business is set up with the compatible software, and while it might sound complex or confusing, it is actually easy to do and can be done using spreadsheets and bridging software if that suits your business.”

The 2.3 per cent figure for registrations for Cumbria might suggest that there is a lack of awareness of MTD, but many will be taking advantage of the fact that the April 1 deadline is not a cliff edge for businesses joining MTD.

Businesses have to join for VAT return periods starting on or after that date which for the vast majority will mean their first VAT return under MTD won’t be due until August 7 at the earliest.

Mr Moynan added: “There has been a lot of negative comments around MTD, but a common sense approach should make it relatively painless and there should be business benefits too with clearer reporting and time savings going forward.

“Obviously for those not already set up this will be a significant change and we are offering free advice sessions to anybody who wants some guidance on what MTD means for them.”

A spokesman for the HMRC said that the number of Cumbrian businesses registering for Making Tax Digital is expected to rise rapidly ahead of the first VAT payments dates after the scheme’s introduction.

“There are over 200 products for businesses to choose from with a range of prices, including some that are free, offering different levels of functionality to suit every business

“More than 3,000 businesses are now signing up every day to experience a more integrated approach to business and tax,” he said.

Firms have also been warned by HMRC that the registration process for MTD will take seven days to complete.