Earlier this quarter, we asked our clients to share how they are preparing for HMRC’s latest market-shaking mandate, Making Tax Digital. Respondents from FTSE 250 firms spanning across a wide range of industries gave us insight into their road ahead for MTD.
Not Ready for Digital?
Whilst the new requirements are still being finalised, Financial Secretary to the Treasury Mel Stride has stated that “there will be no question of any further delay…and we all need to make sure that we’re ready for [Making Tax Digital]”1.
All respondents to our survey felt they were not prepared for the introduction of Making Tax Digital in April 2019, with 33% suggesting they were completely unprepared. With a number of seminars and briefings on the subject over the coming months (sign up to Arkk’s latest here!), getting acquainted with the latest Making Tax Digital news is one of the best ways to prepare.
We’re working with clients to support them through the HMRC pilot programme. Launched in April 2017, this initiative helps both HRMC and individual firms get a clearer idea of what the final process will look like. If you’d like to find more, get in touch with Arkk.
Time for transformation
Making Tax Digital is just part of HMRC’s vision to make tax administration “more effective, more efficient and easier to get right”.2 It’s good to know that filers feel the same way, with 67% of respondents seeing the introduction of MTD as an opportunity to transform their VAT production process.
In line with this, we asked how long it takes to prepare a VAT filing. Half of the respondents said this took up a week, with 33% commenting that this can take over as much as two full weeks. By taking a strategic approach to Making Tax Digital, businesses can go beyond compliance and use HMRC’s latest requirement as an opportunity to make these processes more efficient and effective.
Farewell Typing, Welcome Auditability
Businesses will need to produce a digital trail back to source records in the future. This will show the ‘digital handshake’ between the original data source and the final report to HMRC – manually typing figures into online forms will no longer be an option.
When asked about existing audit trails for VAT returns, the majority of respondents felt their processes were adequate, with 25% citing their digital depository as a robust system. Modernising the taxation process means a move towards real-time reporting (or as close as possible), and capturing a record of how data is collected will be instrumental in this process.
To get involved with HMRC’s pilot programme and start preparing for Making Tax Digital, get in touch with the Arkk team.
1 Accountancy Age, “Mel Stride, Financial Secretary to the Treasury“, Jan 31, 2018
2 HMRC presentation, International Tax Congress June 13-14, 2018