70 percent of tax professionals stalling on MTD for VAT
Thomson Reuters survey has found that business progress is slow on the Making Tax Digital for VAT deadline, despite the opportunity it presents to embrace digital tax compliance
HMRC might declare that MTD will make it “the most digitally advanced tax administration in the world” but a Thomson Reuters survey found that tax professionals are struggling to keep up.
Asked about the status of their MTD for VAT implementations, 70 percent of the 146 tax and accounting professionals surveyed said they are yet to implement any changes. This was despite having developed plans ahead of the April deadline for MTD for VAT.
The survey also found that 37 percent of respondents will now hold fire on changing policies until they hear more from HMRC about the revised October 2019 deadline for “businesses with complex requirements.”
Paused or poised for MTD?
Nearly three quarters – 72 percent – of those surveyed said concerns about software and digital records maintenance are their greatest worries in preparing for MTD.
The decision to delay will mean those companies miss out on the benefits that going digital can bring. Some firms may need to use a “sticking plaster” approach in order to meet the deadlines.
Although 80 percent of respondents said they used the HMRC portal to submit VAT returns, compared with 53 percent in summer 2018, 62 percent said they still tracked VAT processes manually.
Seizing the opportunity
When storing VAT data, 55 percent of accountants said they use spreadsheets. That compares with 23 percent who prefer other in-house software, up from 30 percent in summer 2018.
A third, 34 percent, believe they will still use Excel to store digital records relating to VAT. That suggests they are going for a “quick fix” approach to MTD for VAT.
However, choosing a complete tax compliance software platform gives companies access to features such as exception reporting, full data audit trails including manual adjustments, group and divisional reporting, as well as being ready for future digital tax requirements.
Kim Hau, senior proposition manager for ONESOURCE Indirect Tax at Thomson Reuters said: “There is a real opportunity for tax accountants to embrace software that does much more than simply file a return.
“By accepting the inevitable move towards digital tax reporting, companies can use the new October 2019 deadline to implement indirect tax compliance software that will bring benefits such as automation, reporting, cost savings and improved compliance. It will mean businesses are ready for 2019, 2020 and other future tax changes, rather than taking a quick fix “sticking plaster” approach.”