In April, UK VAT Goes Digital. And You Should Too
As the British government remains mired in the deep complexity of Brexit and the understandable public anxiety about the future, another monumental and hugely complex process in the UK has fallen under its shadow. The ambitious Making Tax Digital (MTD) plan is scheduled to start rolling out in April.
The UK plan to take replace the traditional tax return and filing system with a fully digitized system will start with VAT collection in the coming months. The old system feels more and more out of touch with the times every year, but the immensity of changing it was a sufficient deterrent up until now.
But in April, it’s all going to change. And it’s imperative to change along with it. While virtually everyone has thought, at some point or another, that the tax system was needlessly complex and spread across many departments and policy offices, the time has come to make the mental shift as much as a practical one.
That means it’s time to go digital across the board: no more paper-based records, no more reliance on manual entries and the margin of error that always factors into that. The time has come for fully digital record-keeping.
The opening of the MTD’s VAT collection system is a great place to start. With the new digital reporting, manual, paper-based records will no longer accepted. That means all expense reports, travel expenditures, receipts, etc…will need to be digital.
The Easiest Way to Go Digital is to Start Digital
These days, making the shift to digital record-keeping is not just smart, it’s required. The MTD is a model for Europe that is being closely watched by tax authorities in all of the EU member states. If the model works, it will be adopted widely, together with the demand for digitization of all documents necessary for proper tax oversight.
But even without the added push, going digital makes sense on so many levels. First, it’s the easiest way to keep track of company spending. An expense report filed after a business trip abroad may not be 100% accurate. Receipts could get misplaced and, depending on which language they are written in, the information they contain may not be recorded accurately. And any analysis of spending patterns can only be done after the fact.
But with apps that let you digitize your receipts and expense reports on the spot, like Way2VAT, you have the whole world at your fingertips, or at least the part of it that pertains to your spending and VAT payment.
With Way2VAT you can scan your receipts and expenses in real time so the receipts never get lost and the amounts are put in accurately. The amounts are calculated instantly so you can see how much spending you are doing, and a report can be sent to the planning department at any time. So there is a clear sense of how much money the company is spending at every point.
VAT Is Ready for Refund
Along with an intelligent system for keeping track of expenses – both for tax filing purposes and for better oversight of the flow of cash from your company – the app also makes it simple to file for a refund on the VAT you paid out that is eligible for a refund.
That means compliance with the newest VAT directives is part of the package. WIth all of the records already digitized, your company is ready for the big leap already. It’s much easier to keep it going when the foundation of record-keeping is already digital.
VAT policies vary widely across the EU, so the digitization of VAT in the UK may also bring with it some standardizing of VAT regulations across the EU. That would certainly make things easier, but the real breakthrough from MTD may not be on the governmental level. It may be that the digitization process for small to medium sized businesses is about to take hold in earnest.
Soon, there won’t be any choice.
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