David Hallam, Managing Director at OrderWise
Businesses across the UK are currently battling with a changing political and economic landscape; the decline of the high street and the introduction of new policies are also adding pressure on businesses to keep on top of financial processes. There are now almost daily reports of companies, like Debenhams and HMV, closing their doors and collapsing into administration. An increasing number of retailers are also moving away from trading in high street shops and are now favouring an online platform to keep up with the demands of today’s digitally-minded generation, resulting in consumers opting for omni-channel experiences like click and collect.
Change is continually affecting the business sector; on 1st April this year the Government implemented Making Tax Digital (MTD), an initiative which requires all VAT-registered companies above the VAT threshold of £85,000 to use the new MTD service to submit tax returns digitally using compatible software. HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world and the idea of MTD is to help businesses implement an effective, streamlined approach to their financial services. It is therefore important, now more than ever, for businesses to ensure they have an integrated, automated approach to all their business operations.
VAT is the first part of HMRC’s new MTD program, set to affect around 1.2m businesses. Despite this, a recent survey by the Federation of Small Businesses (FSB) found that nearly half don’t have the right software in place to deal with the new regulations. Businesses that choose not to upgrade their software will have failed to become compliant and are vulnerable to a risk of higher fees.
As business operations continue to become more digitised, it’s vital for all companies to adhere to new rules to ensure they are compliant with current policies. OrderWise, a software specialist based in Lincolnshire, creates business software that is HMRC-recognised for MTD-compliant VAT returns and is fully accredited by the Institute of Chartered Accountants in England and Wales (ICAEW). OrderWise software helps its users to manage all commercial and financial operations and facilitate digital submission VAT returns in line with Making Tax Digital.
As well as adapting its accounts software, OrderWise has already begun tapping into warehouse automation and later this year is launching AI robotic technology.
VAT, however, is just the start; the digitisation of the rest of the tax regime is set to follow. The UK Government has made it clear that other taxes, such as corporation tax, is set to become digitised and is likely to come into play early next year.
Even though MTD has been introduced as part of the Government’s initiative to help companies keep on top of everyday accounting, it will inevitably shine a light on any inaccuracies and inefficiencies in company operations. Entrepreneurs and managing directors should be aware that their teams will need some time to get used to any new software or procedures. Therefore, it is advisable for companies that haven’t already done so to introduce an automated approach to business operations as soon as possible.
Making Tax Digital is a key part of the Government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs. This change will help companies transition into a digital-first world and benefit from improved reporting, reduced stress and faster results. Making Tax Digital is making fundamental changes to the way the tax system works – transforming tax administration so that it is:
- more effective
- more efficient
- easier for taxpayers to get their tax right
While the idea of implementing automated processes might seem daunting for many businesses, digitising financial processes along with integrating other areas of the business, such as sales, CRM, logistics, stock control and warehouse management, will greatly benefit business growth and productivity. Software that can encompass everything from order processing to accounting ensures that no information is lost, and daily tasks are more automated, increasing accuracy and efficiency across all operational areas.
The new MTD legislation also presents an opportunity to automate business processes and streamline communication between departments through centralised management. More efficient operation in the company creates capacity to take on more business and allows sustainable growth.
At a time when business confidence is low, business rates are rising and Brexit is at the forefront of everyone’s mind, finance professionals will need to fine-tune their understanding of digital procedures to make financial tasks much easier and avoid adding further stress to the equation. It will be interesting to see how MTD will benefit businesses now and in the future as the rest of the tax regime follows suit to create a transparent taxation system.
OrderWise is an award-winning, growing, forward-thinking company which provides a leading business management software solution – integrating everything from sales, CRM, marketing, logistics, stock management, accounting and more. It is used by small, medium and large businesses and has over 15,000 users, including high-profile clients such as John Lewis, local authorities, the MOD and police forces.