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Lost in a black hole of VAT reporting?

16th Oct 2019
Brought to you by
arkk solutions
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We recently conducted research into UK tax practices, which delivered some eye-opening results. Our overall finding was that businesses could save a whopping 204,104 days per year by modernising the way they prepare and submit their VAT[1].

The study was carried out in conjunction with Attest[2], who quizzed over 400 UK tax workers. It found that 56% of respondents spend over 10 days per quarter preparing, checking and submitting their VAT – and 11% take more than 30 days.

There are inefficiencies across businesses of all sizes too. For those with a revenue of over £1bn, 28% say the process takes 21 days or more – while the figure jumps up to 40% for those with a revenue between £250m and £999m.

But why is this important? Hasn’t it always been the case that VAT submissions take time? We asked our Chief Product Officer, Russell Gammon, to clarify:

If tax departments weren’t spending, in many cases, one month per quarter managing VAT, they could use this time to provide more strategic information and advice to their business. Being able to provide an accurate view of an organisation’s current tax position at any given time is crucial for the business to make decisions affecting future plans – and is what I imagine most tax specialists would rather spend their time on too.

Another pertinent finding of the research was around the Government’s Making Tax Digital (MTD) initiative. It found that only half of all businesses are aware of MTD requirements post-2019 – such as the need for digital linking from next April. And of those that are aware, only 1 in 2 say they are ‘very prepared’.

Again, we asked Russell for his perspective. Is MTD a ticking time bomb – or an imperative to change?

Despite some uncertainty on the specifics of MTD, we’re seeing that it is bringing the conversation about the digital transformation of tax processes forward. While being compliant is clearly on everyone’s agenda, there are a number of companies who see MTD as part of a wider tax transformation strategy to improve accuracy, reduce manual tasks and futureproof their processes.

If you’d like a full summary of the research report, you can download it here. And for more content, check out the Arkk Solutions blog.

 

[1] Based on an average 60% time saving that Arkk Solutions’ platform for:sight enables for VAT reporting. This was applied to the Attest research responses related to the current time it takes organisations to prepare and submit VAT reports. These percentages were multiplied by the number of private organisations in the UK with a turnover in excess of £100m (5,677 companies) to show the overall UK business impact.

[2] The research was conducted by Attest for Arkk Solutions in June 2019. Respondents had current roles in IT, Operations, Finance, Project Management or Tax and worked across industries in companies with over £100m turnover and 20+ employees. All respondents considered tax to either be the main function of their role, quite a key part of their role or something they oversee but do not get involved in day to day.