How Does VAT Bridging Software Streamline Your Tax Obligations?

Is your business VAT registered? Or are you heading towards the current VAT threshold of £85,000 taxable turnover within your accounting period and planning to register for VAT? If so, you need to know about the HMRC Making Tax Digital (MTD) platform and its requirements for submitting your VAT returns and managing your accounting software.

As a VAT-registered company, you must keep digital VAT records and use software compatible with MTD to submit your returns. It is mandatory for your business, or any agents you’ve hired to handle your VAT returns, to submit those returns using MTD. You must comply with MTD requirements to avoid unnecessary penalties and ensure your business runs smoothly. To do this, it’s important to know exactly how MTD works, the role of VAT bridging software, and why all these solutions come together to streamline your tax obligations.

Understanding the UK’S Making Tax Digital (MTD) Initiative and its Impact on VAT

If you have registered for VAT, you earn over the taxable turnover threshold of £85,000 and can charge VAT on your goods and services. You will need to file a VAT return online. Part of this process will require that you register for MTD.

MTD for VAT came into play on 01 April 2019, and companies have been expected to remain compliant since 07 August 2019. This platform is part of the government’s commitment to making tax completely digital and accessible and companies are expected to keep digital records of all their transactions, invoices, payments and more.

However, not all companies are created equal. You may want to keep using spreadsheets because their entire operation is in that format and changing it would be too disruptive or expensive. Or you may already be using a certain accounting software or platform to manage your business and the move would be equally disruptive or expensive.

This is when you can use bridging software.

But before we dig deeper into what you need to know about bridging software, let’s look at what you need to know about signing up for MTD and getting your business on the right track.

• First, you will need to keep digital business records from the start of your accounting period and determine whether or not your accounting software is MTD-compatible.
• Second, you need to find compatible or relevant software if you don’t already have one. This will be immensely beneficial to your business in both the long and the short term. You can find a complete list of compatible VAT software on the HMRC website.

Once you’ve registered for VAT and set up your systems, you will know whether or not you need to invest in bridging software. This is not as complicated as it sounds. This software is simply there to connect the data in your business, be it spreadsheets or your own software, to the MTD system so that you can file your returns seamlessly.

The Advantages of Using VAT Bridging Software

There are several key benefits to using VAT bridging software to file your VAT with MTD.

1. You can stick with using your favoured spreadsheets that you’ve been using for years: This is less disruptive than moving your entire accounting system to a new software platform and allows you to remain compatible with MTD without unnecessary expenses. The right bridging software will be easily customised to help you automatically export your data to the MTD platform when required.
2. You can keep your legacy software system without any issues and use bridging software when you file your VAT online: Doing this also lets you to avoid the unnecessary expense of investing in MTD-compliant solutions, as many of these can be too expensive for a smaller business that wants to stay compliant but also wants to keep an eye on the bottom line.
3. Bridging software solutions provide you with advanced digital capabilities and intelligent analytical tools: Most bridging software solutions can provide you with real-time reporting and insights. You can then use the software to look back on past returns, assess trends in VAT payments and gain clear visibility into your VAT spend and compliance.
4. Bridging software provides a very compliant and visible audit trail: This is immensely helpful for you to track payments, catch errors, and provide the tax authority with relevant paperwork on demand.

How to Choose the Right VAT Bridging Software for Your Business

Ideally, you want to select a VAT bridging software with all the above benefits. It should also be:

• Easy to use and understand with a low barrier to entry
• Be an accredited solution as per the HMRC guidelines
• Make your VAT reporting and submission processes easier
• Be a trusted solution with a proven track record
• Capable of providing you with exceptional visibility into your business

Blue dot has everything your business needs to bridge the VAT gap while also staying on top of compliance, submissions, digital records, returns and so much more. Our intelligent platform, powered by artificial intelligence and advanced contextual meaning models, and is the leading, trusted solution for companies wanting complete control over their VAT.

Conclusion: The Future of VAT Management Using Bridging Software

Time efficiency, cost-effectiveness, and data accuracy come hand-in-hand with a trusted and reliable VAT bridging software solution. With next-generation technologies such as Blue dot’s VATBox solution, you can minimize your administrative burden, reduce the risk of errors, and enjoy a VAT filing process that is both smooth and painless.

Blue dot brings all this to your business and so much more. Our goal is to help your business thrive in the digital era with solutions that work quickly and seamlessly. If you want to bridge MTD divide and enjoy a fully digital, compliant and exceptional VAT experience, then Blue dot can provide you with personalised assistance and support designed to suit your very unique business requirements and expectations.