, the leading provider of tax software in the UK & Ireland, has announced that they have implemented HMRC recommended checks into its cloud-based AlphaVAT digital tax platform. This new feature enables their users to make correct decisions for VAT handling and improve the accuracy of submissions and payments. Tax Systems are the first software vendor to bring this functionality to its VAT customers, following a successful trial in conjunction with HMRC.
VAT checks are typically run after each VAT submission when errors or discrepancies can result in resubmission of a return. As a result, organisations can find their VAT obligation is subject to change and must operate a legacy process that adds to the time required to finalise a return. HMRC is working with a number of third-party software vendors to bring digital checks into tax processes. Digital checks will form a key part of the government’s plans to transform tax administration to make it more accurate and efficient.
Tax Systems has become the first software vendor in the VAT regime to successfully conclude a “digital checks” trial with HMRC. By integrating in-product prompts to the AlphaVAT platform, key elements of the VAT return process are automated, reducing re-work when HMRC runs their checks. Customers can then ensure accurate calculation of their VAT amounts, avoid fines and protect their reputation. Digital checks will also reduce errors, their potential tax gap and, as a result, improve financial planning.
The Tax Systems pilot scheme was conducted in cooperation with HMRC and resulted in a customer engagement rate of 79%, underlining the potential demand for the Digital Checks functionality. The trial also showed that customers in the trial group created 86% more custom data checks than those in the control group, demonstrating that the introduction of specific HMRC checks would increase data quality on a wider basis.
Nicole Newbury, HMRC’s Director for Wealthy and Mid-sized Business Compliance, explains the purpose of collaborating on this trial, “We want taxpayers and businesses to get their tax affairs right, from the outset. Working with Tax Systems on the VAT digital prompt trial has helped provide the evidence needed to build correctness into tax and business reporting software, as a default, and prevent non-compliant outcomes happening in the first place.
“In the last six years, we have trialled and deployed over 50 nudges and prompts across multiple tax regimes in our own filing software – benefits include over £800m additional tax paid at the right time, improved customer experience and reduced customer and HMRC costs for error correction and investigation.
“HMRC’s engagement with Tax System’s software in relation to this trial should not be seen as an endorsement of their product or services.”
AlphaVAT is a purpose-built, advanced VAT compliance solution capable of handling complex VAT calculations with audit trail and diagnostics, reducing the need for spreadsheets. When harnessed to a tax computation engine, these provide an MTD-compliant pathway to Corporation Tax.
“We’ve been working closely with HMRC in recent months to design and implement our digital checks process, and feedback to the pilot programme has been extremely positive,” comments Russell Gammon, Chief Solutions Officer at Tax Systems. “We’re delighted to have had the opportunity to work alongside HMRC on this pilot and be the first vendor to bring these capabilities to our VAT users, particularly within our widely-used cloud-based solution.”