Only one third of tax professionals find VAT returns to be more accurate under MTD

Only one third of tax professionals find VAT returns to be more accurate under MTD

Thomson Reuters poll suggests digital reporting software offers better result for VAT returns.

Only one third of tax professionals find VAT returns to be more accurate under MTD

In a recent research led by Reuters, one quarter of tax professionals said usage of MTD to report tax VAT returns resulted in positive experience, in which process appeared to be more efficient and easier to complete. Supporters of the digital software believe it improves visibility of indirect tax across transactions and provides accountants the ability to further collaborate with clients. HMRC is already planning on increasing the usage of the time-saving technology to calculate a wider range of taxes.

Companies are already required to adopt MTD on the first day of VAT return due following April 1st, 2019. Research discloses 32% are still selecting what software platform they will use to report VAT returns. Out of the companies with solutions deployed, 20% will be using bridging software whilst 35% are endorsing MTD digital tax reporting software platform or will be using the software by 2020.

Opting for the complete digital tax reporting software allows companies to streamline their operations, an advantageous approach in which tax and finance professionals can focus on higher value tasks.

Benefits of MTD

The usage of MTD by tax professionals can be highly beneficial for their businesses, particularly in areas such as tax planning and analysis. Many of those who have already adopted MTD in their VAT returns already perceive benefits.

Caroline Miskin, ICAEW’s Technical Manager for Practitioner Support said that MTD offers a wide range of benefits to companies reporting VAT returns: “The benefits of digitising tax include giving accountants and clients the ability to collaborate in real-time and view account information, even if individuals are in different locations. Digitisation also means that bookkeepers and their clients don’t have to worry about keeping bags of receipts, as used to be required, saving time by removing the need to look through piles of documents.”

“We have always actively encouraged members and businesses to adopt digital technology where there are clear benefits to do so – the accountancy profession has a good track record of being at the forefront of digital developments,” she added.

A key advantage companies have perceived in using the digital software can be found in the streamlining of tax compliance processes, which are processed through automation and revised reporting. 51% of companies believe MTD offers an easier and more efficient system for VAT returns, with 32% finding VAT returns more accurate under its usage. 19% of companies also believe it offers better visibility of tax liabilities.

Steve Smith, Europe Proposition Lead, Corporates, at Thomson Reuters, commented: “The build up to Making Tax Digital for VAT was clearly a worry for many organisations, but what is clear from the survey is that with the right technology, tax and finance departments can reap benefits far beyond simply filing VAT returns electronically. Adopting a complete digital tax reporting software platform, gives them visibility of indirect tax across the transaction lifecycle and wider organisation.”

“Additionally, government is looking to maximise technological advances for the efficient collection and verification of transaction information to calculate a wider range of taxes. A platform such as ONESOURCE Indirect Tax Compliance, helps companies address today’s indirect tax challenges, and future proofs them against the global and unstoppable shift towards digital tax reporting,” he added.

More equitability

ICAEW does not support mandation as it believes HMRC should seek further collaboration with tax professionals and software companies to provide an equal system for all.

“ICAEW is supportive of HMRC’s digital transformation initiative, although we do not support mandation and believe that as part of any further rollouts of MTD, HMRC should focus on working with businesses and software companies to develop platforms that provide clear benefits for all parties and which demonstrably reduce compliance costs for businesses,” said Miskin.

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