British business could collectively save more than 200,000 days a year by modernising the way they prepare and submit their VAT, according to Arkk Solutions.
The regulatory and statutory reporting and tax compliance specialist commissioned Attest to conduct research among 416 companies and found that 56% of people, whose main function is tax, spend more than ten days a quarter preparing, checking and submitting their VAT. Further, 11% of businesses take more than 30 days to prepare, check and send VAT reports.
There were inefficiencies across businesses of all sizes: 40% of businesses with revenue between £250m and £999m state that it takes 21 days or more to compile and submit their VAT return each quarter. For businesses with revenue over £1bn, 28% reported that the process takes at least 21 days.
Russell Gammon, chief product officer at Arkk Solutions, said: ‘The time it is taking companies to get an accurate picture and submit their VAT reports is like another tax in itself. With the right technology in place, the tax return process should take a day or two – and in some cases, just a few hours.
Arkk believes that making tax digital (MTD) is an opportunity to take a critical view of a company’s processes and investigate where efficiencies can be made, particularly regarding VAT submission time. That said, the research showed that only half of all businesses are aware of the requirements of MTD post 2019 – such as the need for digital linking that will come into effect on 1 April 2020.
Surprisingly, the survey found that nearly half (45%) of tax professionals are either somewhat aware or completely unaware of MTD requirements beyond 2019. And 56% stated they either weren’t sure or didn’t think preparing for MTD beyond 2019 was a priority. Only one in two people who are aware of MTD beyond 2019 are ‘very prepared’.
Acknowledging that MTD was helping to bring forward the digital transformation of tax processes, Mr Gammon said: ‘While being compliant is clearly on everyone’s agenda, there are a number of companies who see MTD as part of a wider tax transformation strategy to improve accuracy, reduce manual tasks and futureproof their processes.’
