In the spirit of being more than just a compliance product, we are constantly talking with our customers to find out where we could automate more of their VAT process. Our most recent release of AlphaVAT had a big drive in this direction – to find problems caused by manual intervention and provide a fully automated solution.
We previously found that 50-70% of our customer’s time was spent in the process checking data and making amendments.
We also found repetition in the amendments made – in some cases over 90% of the changes were based on the same logic each period. We therefore set about reducing manual repetitive work and streamlining the process for our customers.
Two areas where we have improved this part of the journey are manual reviews of anomalies found in data, plus, conversion of data from a foreign currency.
Automated data treatments
Customers can now automate the VAT treatment of transactions where previously they may have carried out a manual review. Users simply set up a rule, based on flexible criteria, to automatically change the VAT treatment of a set of transactions.
Example: Excluding intra-group transactions
A common scenario is where you would need to exclude a transaction completely from the return. For example, where intra-group transactions, such as management charges, are incorrectly included on the VAT return.
Here, customers can set up a rule based on their data structure and logic, to automatically exclude any transactions meeting the rule.
Within AlphaVAT this action is applied automatically to all data sources. It is remembered each period, shown to the user for review, then included within our VAT return reconciliation reports to ensure all automated actions can be traced and reported on.
What else can you do?
In addition to VAT treatments to exclude anomalies from the return, our users can also set up rules to automate the blocking of VAT on certain transactions. A common example of this is blocking VAT on non-business related transactions, such as business entertainment.
The rules can be set up in a flexible manner, running on any column of data processed through the product. This means we can cater for the variety of data structures and logic found in many of our customer’s ERP systems.
We found too, from speaking to users, that it is not always possible to apply an automated treatment to a transaction. Sometimes, manual intervention is still required. In this case, users can still use our existing Custom Data Check functionality to simply report the result of their check then take further action once they have had a chance to review.
Another area we found we could reduce input error, and save time, was Foreign Exchange (“FX”) conversion.
Typically, FX calculations are performed in Excel as part of the VAT reporting process. Although this is generally allowed (so long as the calculations are linked from source to report), it is not considered best practice. HMRC insinuates in VAT Notice 700/22 that it is better to perform such functions within MTD software as “using software for all your calculations will reduce risk of errors in your returns”.
Our most recent release therefore includes automated conversion of FX transactions, with exchange rates pulled from HMRC, and with the reports on the process to ensure confidence and aid review.
How do we get the data?
To make the process as automated and seamless as possible, we built a pipeline to automatically pull the rates published by HMRC. This removes both the need for the user to do this themselves, and the risk of mistyping the rate into Excel.
We also know that not all clients will use HMRC rates, which is entirely allowed should the client choose to do so. In this instance, these customers can still get the benefit of using our integrated FX functionality. Rather than using the HMRC rates, the user can upload the rates via Excel and AlphaVAT will apply those rates to the transactions instead.
How are they applied?
The process of applying FX rates in AlphaVAT couldn’t be simpler. The user defines a few simple settings – the type of currencies used in the source data file, plus the columns required for conversion.
Following these steps, AlphaVAT will automate the conversion of the relevant transactions and users can review the results in their VAT summary report.
Getting customers set up for success
One of the benefits of using AlphaVAT is the improvement gained through implementation of your return process by our expert team of in-house implementors. During set-up, the team work through your process to identify areas for improvement and find where automation in AlphaVAT could add value through removing the common issues found with manual data manipulation.
What is the outcome for our users?
We have found the additional automation offered provides clients with two main benefits:
- Additional control in the process, ensuring that processes are carried out in an automated way. This adds consistency and reliability to the process, by removing human error during data amendments, or through forgotten process steps.
- Time savings compared to manual processes that typically take place in Excel at present. For some of our customers this has equated to multiple days per quarter in their VAT reporting process
To find out more information about custom data checks, please see our datasheet here, (please note this does not refer to the automated data treatments which are a new feature). Or there’s more on FX here. Alternatively, if you’d like to see how these features can help automate your VAT process, please contact us for a one-to-one consultation here.