Tax Systems integrates HMRC checks into VAT platform 

Tax software provider Tax Systems has implemented HMRC-recommended checks into its cloud-based AlphaVAT digital tax platform.

This new feature enables its users to make correct decisions for VAT handling and improve the accuracy of submissions and payments. 

Tax Systems is 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.

HMRC’s director for wealthy and mid-sized business compliance, Nicole Newbury, said working with Tax Systems on the VAT digital prompt trial had helped provide the evidence needed to build correctness into tax and business reporting software, as a default, and prevent non-compliant outcomes from happening in the first place. 

“We want taxpayers and businesses to get their tax affairs right, from the outset,” she said.

“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.”

By integrating in-product prompts to the AlphaVAT platform, key elements of the VAT return process would be automated, reducing rework when HMRC runs their checks. 

Customers could then ensure accurate calculation of their VAT amounts, avoid fines and protect their reputation. Digital checks would also reduce errors, and 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 per cent, underlining the potential demand for the digital checks functionality. 

The trial also showed that customers in the trial group created 86 per cent 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.

“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,” Tax Systems chief solutions officer, Russell Gammon, said. 

“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.”