Firms were responding to the survey carried out by Azets. It followed a webinar attended by 577 business representatives, with 340 responding to follow-up questions.

Fraser Campbell, Glasgow-based UK head of accounts and business advisory services (ABAS), said: “The online poll showed overwhelmingly that the majority of businesses are simply not ready for MTD.

“I was alarmed that more than 63% of respondents were not prepared at all while another 31% have simply ‘started preparing’.

“Less than 6% reported that they were ready for the introduction of MTD, which is worrying given that it is the most significant overhaul of the tax system since the introduction of self-assessment 29 years ago.

“Time is of the essence. We urge all businesses affected to put plans in place to deal with this shift to ensure a smooth and compliant transition.

“Perhaps the biggest change is the need to keep digital records, use MTD-compatible software and submit updates every quarter, as well as a final declaration.”

Landlords, sole traders and the self-employed with gross income above £50,000 per year will have to comply with a new Making Tax Digital (MTD) regime from April.

The tax system is being brought closer to real-time with the changes affecting 864,000 individuals and landlords nationwide – with numbers predicted to rise to 2.9m within three years as income thresholds are lowered.

The poll asked about the most pressing concerns respondents had surrounding MTD. More than 37% cited ‘understanding what needed to be reported’, 25% said ‘knowing what was needed to comply’ and more than 21% pointed to ‘choosing the right software’.

Mr Campbell added: “While MTD will mean changes in processes and software that is compliant with MTD, the switch will also bring advantages for individuals with access to near real-time information and insight about their businesses, cashflow, income and taxes for the first time.

“Getting the right advice from the right people will help those who are in scope of it be ready and confident for its introduction – whether they’re affected by the changes this April, or in the years that follow.”