A majority of businesses are 'blissfully unaware' a huge change in how they must file their VAT returns will soon be introduced by the Government.

That is the verdict of a leading accountant who says action is needed now as the deadline on HMRC’s Making Tax Digital initiative looms.

Businesses which fail to prepare could face repercussions, as Whitehall pushes ahead with one of its biggest tax changes in a generation.

Paul Hornby is the managing director of JF Hornby and Co.

He said: “There’s a real issue here with the degree to which people are prepared. It’s a huge deal, and while there has been a supposed awareness campaign around what’s happening and when, my experience is that it hasn't resonated with many business owners at all.

“We have taken our own steps, as any responsible accounting firm should, to ensure that our clients are prepared and aware what’s around the corner, and I'm glad we made the decision to take that step because the efforts of HMRC have frankly been laughable.”

Almost 1.2 million businesses have one month to go before the introduction of Making Tax Digital – a new way of keeping business records and submitting digital VAT returns.

Yet only at the start of the month, only 30,000 businesses nationwide had signed up to the new service which the Government says will give them a more integrated approach to business and tax.

More recent figures suggest just seven per cent of North West firms which need to sign up have done so.

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 Making Tax Digital compatible software.

HMRC has written to every business that will be mandated with information on what they should do and how.

But Paul said: “The figures say it all. The whole process has not been very streamlined at all – and I fear chaos looms on the horizon.”