The end of the annual tax return – are you prepared?
HMRC recently published plans to bring about the end of the yearly tax return by 2020. Put simply, this will require that most businesses and self-employed workers provide at least quarterly updates to HMRC, through the utilisation of software or applications. This is a positive move by the institution, which has dedicated itself to embracing new technology and simplifying the process of the dreaded annual tax return, permitting finance departments to function in a more agile and dynamic way. On the other hand, the move could be seen as a long time coming, as many forward-thinking companies have been utilising technology enabling frequent reporting for some time.
A change of frequency – are businesses ready?
Technology helping firms keep track of their accounts in real-time already exists, however, the frequency of the new reporting process HMRC is suggesting could be problematic. Businesses in the UK are currently engrained in the yearly reporting process, meaning an increase in frequency will need to bring with it a new way of working. Embedding these processes within our working culture will be essential, yet, how HMRC is going to help companies achieve this remains to be seen. The questions this raises are: what will this process be, and who will be responsible for ensuring this works smoothly and businesses are compliant with the new rules?
This could lead to increased pressure on accountants and finance departments at the outset. A future HMRC accreditation scheme for software solutions should help facilitate the change, ensuring all data held for reporting has been through the right processes in order to provide frequent updates. Frequency and responsibility shouldn’t be a concern as the majority of modern finance solutions already help businesses audit numbers to determine if they have gone through the correct process. This is essential when analysing a chain of responsibilities that help a system arrive to a specific number. Financial software technology audits this trail easily to determine where a figure has come from and if the process was correct.
Enforcing best-practice – is SaaS the future of financial technology?
Many small and large companies still utilise spreadsheets, which are prone to errors, unsecure and don’t allow users to trace their workings. This move by HMRC to increase the frequency of tax reporting could be a way of enforcing best practice on those companies who are still utilising this outdated approach. Utilising HMRC software for financial reporting not only ensures that businesses can be certain a figure has been reached through the correct process, but this can also be reported in an efficient manner. Those who are already utilising this technology will be prepared for the 2020 deadline; however, firms that are not will have to consider embracing technology in order to remain compliant and avoid fines.
Software-as-a-Service (SaaS) technology will provide the key in preparing businesses for frequent tax reporting in 2020. When HMRC implement changes and roll-out updates, SaaS technology will ensure that businesses software can automatically update and therefore remain compliant. In comparison, utilising Excel, or legacy software in-house, means these updates will not be automatic, risking incompliance, and most worrying of all, fines.
To find out how Talentia’s Corporate Performance Management (CPM) technology could help your business remain compliant, visit: https://www.talentia-software.co.uk/solutions/corporate-performance-management.html