Online tax switch raises costs for small firmsAnalysis by the Federation of Small Businesses (FSB) suggests an overhaul of the tax system that introduced compulsory online filing has increased costs and administrative burdens for small companies. The FSB found the average annual cost for participating businesses is £4,562, with this considerably higher than the £2,960 for those yet to migrate. Those within the Making Tax Digital system must purchase compatible software and the FSB said subscription costs may grow as the initiative is extended to cover more taxes. The FSB says that of those that have switched, 70% said costs and time lost to learning new processes has increased. Mike Cherry, national chairman of the FSB, said: “For many of those who’ve already taken the plunge, the programme has so far yielded higher costs and greater complexity.” VAT-registered businesses with taxable turnover over £85,000 are required to keep digital records and use software to submit their VAT returns, while VAT-registered businesses with a taxable turnover below the threshold will be required to follow the regime from April next year.