Organisations need to digitalise their tax processes to meet the compliance requirements of Making Tax Digital starting with MTD for VAT (MTDfV). As software suppliers supporting MTDfV, our new AlphaVAT suite of VAT software prepares the tax function to meet the demands of MTD now and into the future.
MTD will see the mandatory digitalisation of the tax process starting with VAT with other regulations, such as Corporation Tax, set to follow. HMRC will withdraw its online filing portal for the majority of businesses above the registration threshold from April 2019. Under MTD these businesses and their agents will need to maintain digital records and digitally submit returns using MTD functional compatible software (FCS), for periods starting on or after 1 April 2019. A second phase, from April 2020, will see the mandation of digital links for the exchange of data between software applications used to meet the MTD obligations.
HMRC recently announced a MTD mandation deferral of 6 months, to 1 October 2019, for certain VAT business types. These businesses are currently unable to participate in the MTDfV pilot. The deferral affects VAT groups and divisions, businesses trading with the EU, those based overseas, businesses that submit annually, make payments on account, use the flat rate scheme or are newly registered for VAT.
The AlphaVAT family is an FCS solution specifically designed to meet the imminent and long term changes wrought by digitalisation. Through an incremental step-by-step process, AlphaVAT helps the business to evolve to meet mandatory requirements, establishing a digital bridge and digital links that eliminate dependency on manual processes and pave the way for adaptation to meet future regulatory change.
The AlphaVAT family features three products – AlphaBridge, AlphaLink and AlphaVAT – that when used in association with AlphaTax provide an MTD compliant pathway to corporation tax.
A four step journey to compliance first sees a digital “bridge” created between the current method of VAT calculation and the submission to HMRC. Secondly, automatic digital links are used to capture data from sources such as nominal ledgers and across multiple types of accounting systems, generating a central pool of compliance data for future MTD requirements. Thirdly, an advanced VAT compliance solution capable of handling complex VAT calculations with audit trail and diagnostics removes the need for spreadsheets. Finally, when harnessed to a tax computation engine, these provide an MTD-compliant pathway to Corporation Tax.
- Enables phased migration to a fully MTD compliant state in anticipation of existing and future regulatory change.
- Provides a cost effective solution without the need to change existing systems and processes.
- Uses automation to streamline workflow.
- Eradicates manual processes reducing risk and freeing tax professionals to focus on value added tasks.
- Facilitates effective data management including dashboards that give visibility of past and present obligations.
- Available as a white-labelled solution to corporates or advisors who wish to rebrand.
Providing the digital link between existing VAT calculations and return submissions, AlphaBridge uses the supplied API software to integrate with HMRC systems and exchange data via a secure portal. Information is collated or linked from source systems or spreadsheets into an Excel template which acts as an interface for uploading the 9-box amounts to the cloud before submission. AlphaBridge enables both present and historic data views of obligations, liabilities and payments.
A data extraction platform that digitally links data from accounting systems to create a data pool from which the VAT data can be seamlessly imported into the AlphaBridge template Excel or AlphaVAT, AlphaLink, in combination with AlphaBridge, satisfies all the digital requirements of MTDfV. The data pool created by AlphaLink holds the data to drive both VAT calculations and Corporation Tax calculations, future-proofing the organisation against further tax digitalisation.
An advanced VAT compliance solution that removes the need for spreadsheets and can handle the most complex VAT calculations, AlphaVAT includes robust tax logic, secure access control, comprehensive audit trail and legislative help, providing advanced guidance for teams to calculate and submit MTD-compliant tax returns. In addition to calculating core domestic VAT, it can also be used to assess VAT recovery rates and adjustments, VAT groups, cross border VAT, and VAT accounting schemes.