Making Tax Digital for VAT: Challenge or Opportunity?


While the challenge posed by Making Tax Digital (MTD) is widely recognised, the opportunity is less so.

When the House of Lords Economic Affairs Committee published its report into MTD at the end of 2018, little attention, if any, was given to one of its main recommendations: that businesses should, "choose digitalisation for productivity, efficiency and modernisation reasons rather than just tax compliance". MTD for VAT is a stage post on the journey to tax automation - not the end goal.

MTD is continuing the trend towards automation, fuelled by the governments agenda for transforming the UK into a digitally advanced tax administration. It is seeing resources stretched and CFOs demanding more value, but embracing automation will deliver tax information efficiently and accurately. Additionally, it will deliver data analytics, providing businesses with the visibility required to measure performance, drive innovation and aid decision-making.

Automation is bringing tax in-house and redefining the client/adviser relationship, shifting the emphasis from compliance to tax planning and other value added activities. MTD for VAT is helping to drive automation, however, organisations need to avoid the temptation to select an MTD solution with only 2019 compliance in mind in order to harness these benefits.

It's critical that your solution provides value beyond VAT as a part of a broader automation strategy. The House of Lords report found that many businesses would, "prefer to move to a system that would be compliant for all taxes" such as, corporation tax or income tax (due to be digitalised from April 2020), and that they wanted to make "the best long-term choice".

It's for these reasons that MTD should be seen as a stepping stone to automation rather than the end game, It presents an opportunity to transform the tax function, equipping the tax professional with the tools to focus on governance, data analysis and tax planning to create real value for the business,

Featured Posts
Recent Posts
Archive
Follow Us
  • LinkedIn Social Icon
  • Facebook Basic Square
  • Twitter Basic Square
Making the
Numbers Count
  • LinkedIn Social Icon
  • Facebook Social Icon
  • Twitter Social Icon