As of April 2019, HMRC will be transforming the way that tax administration is performed.
This will require potentially significant changes to your accounts department procedures, as well as your Microsoft Dynamics instances.
What is Making Tax Digital?
Making Tax Digital is an important change intended to improve the accuracy of tax reporting. It is a move towards greater automation of tax return submission, and aims to introduce more transparency around the taxes businesses owe.
The first major requirement will be for VAT submissions to be made digitally. As of 1 April 2019, VAT-registered businesses with a turnover above a threshold of £85,000 will need to keep records digitally and use software to submit their VAT returns.
Reporting on income tax and corporation tax will also need to be digitised by April 2020.
How can Microsoft Dynamics help?
Microsoft Dynamics is an integral part of many companies’ accounting processes. As a result, Microsoft has been working with HMRC to ensure that Dynamics solutions will comply with the legislation.
Following demonstrations, Microsoft Dynamics 365 Business Central and Microsoft Dynamics NAV have been added to HMRC’s software supplier list. This means that these Dynamics solutions will permit the submission of VAT returns once HMRC’s application programme interface (API) is added.
Though not listed on HMRC’s website, Microsoft promise that Dynamics 365 for Finance & Operations will also be made compliant.
What do I need to prepare for Making Tax Digital?
Microsoft is due to release the necessary update for Microsoft Dynamics 365 Business Central and Microsoft Dynamics NAV in Q1 2019.
Businesses using Dynamics 365 Business Central can contact Akita to assist with the integration of this API.
Businesses using Dynamics NAV will first need to ensure that they are using version 2015 or above. If they are not, they will need to perform this upgrade first before proceeding with the API integration.
As it stands, companies using Microsoft Dynamics AX for their accounts will need to look at an alternative solution. While approved third party tools may appear, there is a strong likelihood that companies may need to consider migration onto newer Microsoft Dynamics platforms.
The perfect time to adopt Microsoft Dynamics
Not only will your accounts department have an HMRC-compliant piece of software, but you can discover a solution that will introduce benefits across the whole of your operations.
For more information about Dynamics 365 Business Central or NAV, or to arrange a demo, please get in touch.