In the latter half of 2018, Arkk began meeting with both clients and prospects alike to discuss their new requirements for HMRC’s Making Tax Digital for VAT mandate. Hundreds of meetings later, across businesses of different sectors and sizes, we’ve heard many unique challenges faced by Indirect Tax Managers. Our tax expert Tom Aspinall takes a look at these questions in our latest MTD series to tackle the top issues faced by Tax teams in the run-up to the deadline.

If you haven’t read the rest of the series, you can check out Part I and Part II.

Challenge Four: We’re affected by the October deferral. My business doesn’t want to invest in Making Tax Digital until closer to the deadline.

Many businesses will have breathed a sigh of relief with the HMRC deferral of their Making Tax Digital deadline to October. This presents an opportunity for VAT Groups to fully test their solution, and ensure that they’re not implementing at the last minute. However, tax teams that see the October deadline as a reason to ignore their MTD project for six months, are akin to the students cramming a year’s revision the week before their A-Levels.

Implementing a well thought out MTD software now in preparation for October involves less risk and will have compound rewards:

1: A ‘Dry-run’ well ahead of the deadline allows firms to iron out any potential issues, and to refine and improve on their current process, no matter for smooth they may be already. Tax teams can become fluent and efficient with new software, rather than encounter a last minute, stressful scramble with greater potential for human error.

2: Compliance aside, the best Making Tax Digital platforms offer far greater benefits than many envisage. With the potential to recover VAT revenue by interrogating each line of data, MTD is suddenly an opportunity rather than a compliance burden. Why use the HMRC deferral time to see if you have overpaid VAT?

Making Tax Digital - the HMRC deferral

Challenge Five: I’m nervous to implement something completely new. We’ve been burned before.

We have already discussed the benefits of implementing now rather than waiting until later in the year, even if you’re impacted by the HMRC deferral. For those who have been stung before through poor or rushed software purchasing decisions, the deferral presents a great opportunity to;

1: Build a business case – this will help convince the wider business stakeholders of the legitimate need for specialist MTD software beyond the band-aid ‘bridging software solution’. Consider: How many hours could we save each quarter? How much potential VAT recovery could we expect? What is the roadmap of this solution – will it save us money in the future as it facilitates other elements of our puzzle; Corporation tax, EC sales lists, iXBRL? What are the benefits of having one vendor for all of these? The efficiencies and economies of scale are compelling.

2: Prove the concept. The best MTD software providers will have the confidence to partner with tax teams and prove the concept well ahead of HMRC’s October deadline. In the short term, this will help allay fears from previous bad experiences. Looking further forward, this presents the opportunity to refine and build a process that truly works for the specific needs of each tax team.

Check back next week when we’ll cover more challenges (and how to solve them!) including how to select a solution for HMRC’s future Making Tax Digital plans and how to ensure it’ll work with your systems.


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