VAT’s Making Tax Digital has already been started and is going strong– a maximum of businesses are integrating it and others will have to accept the new MTD for the regime of VAT.
There’s always a good time to ensure that your organization is ready for the changes coming up to filing VAT returns and record-keeping, which comprises checking whether your company has supported software or not.
Get to know the different kinds of VAT software available for the business, and how the software can be decided to suit your business needs?
Why is digital MTD software essential?
The major change which has been added under the scheme is that the organizations that fall under this category need to do the filing of their returns with the help of software compatible with it unless any exemption comes up.
As it comes under the digital process, the business needs to start the VAT return process with the help of available data in the records. The manual option is now unavailable and businesses cannot file a return.
What are the options of software compatible with VAT’s MTD?
As there’s no software offered by HMRC, the businesses will have to rely on any other software to combine with this scheme.
- Bridging software
The software lets a business get connected, like the Excel spreadsheet which is enabled through non-API, or software of accounting, to the system of HMRC and the MTD platform. A business can report and upload digital VAT data to HMRC.
- Spreadsheets enabled through API
If various spreadsheets are used by your business while preparing and filing for returns of VAT, then you might have heard of free VAT check API spreadsheets for MTD.
As per the HMRC, API-enabled sheets should usually either get combined with the software of accounting for submitting the information related to VAT digitally to HMRC or can be used for keeping the records safely and then submit the information of VAT directly to HMRC digitally.
- Integrated software
In MTD for VAT, data that has been submitted to HMRC should be sent via API. Various software companies offer a fully integrated software solution that supports API and are compatible with HMR’s MTD platform.
With this solution, businesses can store their VAT records digitally and submit the returns online with the help of software.
How to decide the software?
There’s no direct answer to this question. Deciding which software to choose depends upon various factors, like:
- Whether the business implements cloud-based software and continue doing the same in the future
- Whether the business highly rely on spreadsheets while filing and compiling returns
- How many resources and time the organization promises for learning the new software
Another factor that plays an essential role in deciding the software is a digital link.
It might be worth thinking about whether it’s easy switching to an MTD solution that does not involve the use of the software.
Choose it wisely!