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UK MTD for VAT

HMRC's 'MTD for VAT' aims to avoid 'manual entry' mistakes, and that all underlying VAT line items of the VAT return are not only digitalized but at the end readily available so HMRC can perform soon closer to real-time tax audits. We explain MTD UK in detail.

Companies often still use nowadays spreadsheets in the VAT return process. Those spreadsheets have to be upgraded to meet the new HMRC requirements. Also, the 'VAT accounting records' should be digitalized and provided to HMRC. Such data request can go back six and in some situations ten years when HMRC announces a tax audit. The current way of archiving at companies might not adequately facilitate that obligation. Restoring that archived VAT data and transform it in the right format could take long, be resource time-consuming and an expensive exercise.

Companies have to submit digital VAT content in a specific format to HMRC’s new API platform. Sometimes direct communication between SAP and a third party (HMRC) is not allowed because of internal IT policies. Those IT policies might qualify 'direct communication' an unacceptable 'hacking' risk. To comply with such IT policies a 'MacroExcel solution' in combination with 'Bridging software' might be the right fit.

Tax digitalization is a global trend, and to anticipate on that upgrading the current VAT workflow in a similar way is common sense. An online portal that gets team members access to all filing obligations, submit source data, review and approve returns, receive reminders and payment instructions and monitor progress. All your VAT compliance obligations managed in one central places.

We explain the solutions we have developed in more detail in the following articles:

Written by Richard Cornelisse

 Richard LinkedIn

Richard advises multinational businesses in improving the efficiency and effectiveness of their Indirect Tax Function and Tax Control Framework.

He started his career as a manager at Arthur Andersen and then became a partner in EY where I led the indirect tax performance team for Netherlands and Belgium. Currently he is a senior managing director of KEY Group.

Richard has over 20 years’ experience advising clients on international VAT issues. He is specialized in the tax aspects of financial transformations, shared service centre migration, and post merger integration work. Richard is also somewhat of a mentor, giving back to the profession. If you are interested in conversation and discussion, please feel free to contact him.