There are several reasons why businesses may have stalled their deployment of technology solutions for HMRC’s Making Tax Digital (MTD) for VAT. Firstly, the deadline was extended to April 2021 and then the unimaginable happened when COVID-19 struck. However, HMRC has been very clear that there will be no further extensions to MTD for VAT.
The investment your business is about to make in tax technology to meet the new requirements has never been more significant or critical. Without the right resources in place you can expect the workload of your already stretched finance and tax department to increase as they try to operate in the evolving tax landscape. Now, more than ever, is the time to invest in the right technology to support your people and business through this time of transformation, of which MTD for VAT only marks the start.
According to the 2020 Thomson Reuters European Corporate Tax Managers Survey Report, 89% of organisations consider tax technology as strategic to the success of their tax function, and yet only 39% actually have a tax technology strategy. The digital transformation of tax is only going to accelerate, and at an exponential rate. If you’re serious about the future of digital tax reporting, now is the time to look for a technology platform that’s not just “good enough” to meet UK MTD for VAT requirements but that will also drive efficiencies across all tax changes that are to come and support multiple territories if you operate globally. Now is the opportunity to become a leader in your finance and tax department.
There’s much to consider when evaluating tax technology platforms, especially if you are looking beyond simply complying with MTD for VAT and reaping other benefits.
Eight key factors to consider when evaluating an MTD for VAT software vendor
- Flexibility and adaptability. Both are critical in the product that your company chooses. The software must be able to adapt with your business and as tax requirements evolve around the globe. Sometimes these changes will be temporary and unexpected. How will your chosen software help you deal with that?
- Speed and depth of implementation. Given there’s a deadline looming, how quickly can your MTD solution be deployed and integrated into your existing infrastructure? With businesses often having unique processes already in place, does your vendor have the expertise to make sure everything runs smoothly?
- Great user experience. Choosing software that is easy to use and intuitive is important – it shouldn’t be a barrier. The software must be customisable, so that it uses the language that matters to your business and integrates well with existing software in your business. Remember, a tax technology platform is there to simplify your role, as much as it is there to meet legislative requirements. Many of us now work from home, so it’s important that the product experience is no different than when you’re in the office. Cloud technology and strong security are key to making this possible.
- Tax content. Does the solution provide tax content and up-to-date changes to help reduce the risk of non-compliance while also enabling you to stay ahead of regulatory changes?
- Multi-country coverage. While your immediate need may be to address HMRC’s MTD for VAT, it is worth considering a solution that supports VAT returns and the related supplementary declarations in other jurisdictions relevant to your operations.
- Maintenance. It’s really important that you assess how much IT and tech support will be required during and after the implementation of your new tax technology. You need to work alongside your IT team to ensure that you adopt technology that doesn’t have excessive maintenance costs every time you need to make a tweak.
- Support. Is the support team made up of software engineers or tax experts? Tax is complex, which is why you are so important to your organisation in the first place! Check that the support teams have indirect tax expertise, that they have trodden your path, and that they understand the real world complexities of managing tax in a company.
- HMRC-approved vendor. And finally, is your preferred choice an HMRC-approved vendor? It will save you a lot of trouble if you select a partner and solution that works side-by-side with HMRC’s technology teams.
Adopt a tax software solution that does more than tick the MTD compliance box
If you’re looking for a quick answer to MTD for VAT, you risk missing the bigger picture and having a painful experience. As we’ve previously discussed, MTD for VAT bridging solutions may seem cheaper, but they’re only a sticking plaster to stay compliant in the short term. Similarly, the pitfalls of relying on Excel, where human error is rife, only puts you at greater risk.
Outsourcing all of your tax compliance to an external service provider could lead to a lack of control and create challenges to collect and analyse the data when needed at short notice in the future. Although it might feel like you’re transferring some of the risk to agents preparing the returns, once underlying invoice processing or transactional inaccuracies are found, the buck ultimately stops with you. By that point you will find it hard to escape from audits or financial penalties, which will adversely impact your company’s risk rating with the tax authorities.
With increased compliance requirements, spreadsheets can potentially increase costs with the need to outsource to accounting firms to review data which, in turn, means the process takes longer. Ultimately, using Excel is not an efficient or effective way for your tax team to work. From a holistic point of view, greater value can be achieved by adopting a software solution that does more than tick the MTD compliance box. You will find that technology solutions can also be used to help achieve high returns on investment by creating greater efficiencies and reducing risk across the entire tax department.
At Thomson Reuters we heavily invest in content and technology that powers ONESOURCE Indirect Tax Compliance. Our focus on technology development and continuous content improvement means that our customers always have the latest version of our software. Any changes needed to comply with the constantly evolving tax landscape are tested and applied by us and, most importantly, are instantly available to all. It means our software is fast, streamlined, and capable of much more than making your MTD for VAT filings, such as analytical tax reporting – all with 24/7 customer support.
It’s time to acknowledge that MTD for VAT and other tax regulations are here to stay, with more digital tax reporting to follow. Now is the time to thoroughly assess your technology options and carefully consider how you can drive maximum impact in terms of productivity, efficiency, and compliance.
Contact us today for a demo of our ONESOURCE Indirect Tax Compliance solution for MTD.