The 1st of April has come and gone but the transition to Making Tax Digital for VAT (MTDfV) filing is far from over. The true impact of the change will be felt at the first VAT return submission. What should be top of mind for you is keeping digital records, reviewing your VAT clients and assessing your current processes to ensure they are fully compliant.
While it may seem overwhelming at first, start with these simple considerations as you prepare for your first submission.
How are you submitting VAT returns today?
Firstly, consider how you submit VAT returns today. Are you submitting on behalf of your client using a bookkeeping product, or using a spreadsheet to come to the nine figures only to manually type them into HMRC’s online service? Do your clients prefer to submit their own VAT returns using a bookkeeping product or HMRC’s online service? The final question should be, are these processes compliant and if so, do you want to maintain them?
How will you maintain digital records?
The next fundamental step should be to start maintaining digital records to ensure the first VAT return submission is compliant. The good news is that spreadsheets remain acceptable for digitally capturing data. For some, this might be the logical first step to digitalisation. Providing you use API-enabled or bridging software to make the final submission, you have the freedom to keep spreadsheets with valuable historic data and calculations in the process.
How do your clients currently submit their VAT returns?
Finally, in preparation for the first submission, whether you submit monthly or quarterly, you should be completing your final reviews on all your VAT clients to establish:
- Do they want to complete and file the VAT return themselves?
- Do they want your practice to prepare and file on their behalf?
- Do they want your practice to validate and file the return after they prepare the data?
Once you have agreed on how to proceed for each of your clients, the next step is reviewing the system you use today and even setting up a new system for monitoring your deadlines. This will ensure that you know when all the different activities are due and are alerted to filing deadlines ahead of time.
How do you currently monitor your VAT returns?
Research shows that most practices have been using spreadsheets to monitor returns, which tend to list out the key milestones and deadlines. One solution that practices are looking at is being able to set up an automated workflow within their tax and accounting software which incorporates the alert data, the activities and when they need to be completed.
The key question to ask yourself would be, is the process you have efficient and compliant? If the answer to either question is no, join us at stand 1060 at Accountex on 1 and 2 May to find out how you can achieve both while maintaining a level of choice.