Making Tax Digital: The importance of APIs
"Information and data are at the heart of everything in today’s economy. The speed at which data can be captured and shared has created a world that connects businesses better than ever before"
The world of cloud accounting connectivity is in full swing. You’ll have heard about all the integrations with online accounting software, the inevitable Making Tax Digital (MTD) and the move to digital strategies being top of the agenda for government departments HMRC and Companies House. All these harness the power of the Application Programming Interface (API).
APIs can be explained simply with Lego. Lego bricks have a universal way of connecting to each other with bumps and holes. They know where they can fit and the correct way of being put together. This is the same with APIs, they all have their specific ways of connecting to each other. The beauty of Lego allows anyone to put them together to create their own world of connection.
Information and data are at the heart of everything in today’s economy. The speed at which data can be captured and shared has created a world that connects businesses better than ever before.
There are so many usages for APIs. One way is the texts you receive providing a time for your deliveries, reminding you about an appointment or offering you pizza at just the right time. All of these can be sent using an API from a delivery company, a doctor’s surgery and a pizzeria’s software.
What you may not have known is that you are already using APIs to submit tax returns and accounts to HMRC and Companies House. MTD will take this to the next level. There is a lot of scepticism around how it’s going to work, when it’s going to be completed, who it’s going to affect, is it even going to be worthwhile? The truth of the matter is, with APIs anything is possible. The only constants we will see are change, adaption and improvement which is the only way in life.
MTD for VAT is almost upon us. Use of the Government Gateway will be withdrawn for the cohort of businesses eligible for MTD VAT and third-party software will be used for most VAT returns from April 2019. This is only possible due to HMRC creating APIs that allow Taxfiler and other software houses to ask for VAT periods; viewing previous VAT returns; requesting latest payments and liabilities; and submitting VAT returns. Applications are having millions of conversations without the need of heavy human involvement because of API development.
The opportunity for accountants to harness the power of new technology is the most significant change in our industry for decades.
APIs are here to stay and there’s never been a better time to learn, understand and utilise these in your business. The possibilities are endless…
This guest post was written by Rob Wilcock, product manager, Taxfiler