Her Majesty’s Revenue and Customs (HMRC) is spearheading a new scheme designed to reduce the amount of lost tax income. According to HMRC’s own figures, it’s now the case that more than £8bn is lost every single year as a result of needless mistakes – meaning that action needs to be taken.
Step forward Making Tax Digital (MTD), a scheme designed to ensure that lost revenue is minimised as much as possible. This article will explore three major steps you need to take before the 1 April implementation deadline if you’re a VAT taxpayer looking to get ready.
Update your software
If you are responsible for your own VAT return in-house, now is the time to be certain that your software is appropriate. The key litmus test is whether or not it can integrate with HMRC’s APIs: if it can, then the proper flow of tax return information can occur. If you currently use a spreadsheet provider, this won’t be guaranteed – so collaboration with the IT department to find this out may be necessary.
If MTD is putting you in the market for new finance software, it’s also a chance to look for other technological features you’d like to have. A company-wide data dashboard that reduces the number of times you need to respond to requests for financial information, for example, could spell significant improvements to your team’s efficiency levels.
Speak to your accountant
For some firms, though, it’s likely that an accountant will be the one responsible for submitting the annual VAT tax return. This is where supplier liaison skills come in: you’ll need to contact your accountant promptly and ask them to confirm whether or not their software packages are MTD-compliant. In the vast majority of cases, accountants will be ahead of the curve on this, but in others, they might not be – so ask them to confirm the name of the software package they use and the version they have so that you can double-check you’re covered.
Train your team
While in theory, you should already have your MTD-compliant software package in place and your team should perhaps already be comfortable using it, this might not necessarily be the case. If you have to make a last-minute switchover in order to meet your MTD obligations, don’t forget to invest the time in team training (delivered either by you or by an external provider). This sort of cost will often pay for itself in the long term, as it means a lower risk of manual keying errors or other time-consuming problems.
According to research from YouGov, almost 900,000 businesses may still have not been ready for MTD as the end of last year rolled around. If you’re one of them, don’t let it hold you back. Instead, take the time between now and 1 April to implement changes, converse with your accountant, and ensure that your team are on board.