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My business uses software but it is a bespoke system…

You will need to speak to your provider to see whether they are planning to develop the software to enable it to submit VAT returns through HMRC’s API platform.  We understand that you have made a significant investment in this software and would not want to move to a different provider.  Therefore, if your current provider is not planning on developing the software to interface with HMRC, you may want to consider an additional provider that has compatible software.

Multiple pieces of software can be used as long as there is a digital link between each one. So, it may be possible for the base data to be extracted from your bespoke software and the compatible software prepare and submit the VAT return.  Mitchell Charlesworth works with Xero which already has a number of conversion and compatible applications and it may be possible for a specific application to be developed to assist in this instance.

Click here for further information about Xero.

As part of any upgrade or software change it is important to undertake a review of your VAT return preparation process to ensure that your current process is compliant with the new rules and your VAT codes are used correctly.  For example, a common error identified is exempt transactions being coded as either outside the scope or zero-rated rather than exempt.  Under the new rules, businesses must have a record of output values per period split between standard rate, reduced rate, zero-rate, exempt and outside the scope and therefore coding errors like this will mean you are not compliant with the new rules.  We also see confusion over the correct codes to use for transactions with suppliers and customers outside the UK.

Additionally, only certain manual adjustments are permitted under the new rules and therefore if your VAT return preparation process involves manual work you may need to configure your accounting software differently to automate some of this process.

Our specialist VAT team is happy to help with this.