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How to Create MTD for VAT on Salesforce

By Bash Din

In the landscape of tax regulations, compliance with Making Tax Digital (MTD) for VAT is a crucial requirement for businesses. MTD’s primary objective is to streamline tax processes, making them more efficient and accurate. MTD reduces manual data entry and paperwork, saves valuable time, and minimizes potential errors.

As digital tax systems are adopted globally, businesses must prioritize MTD compliance. In the UK, MTD is now a mandatory requirement for VAT-registered companies, who must submit their VAT returns digitally. Compliance with MTD is essential in the UK tax landscape, necessitating businesses to adopt digital tools for accurate and timely tax obligations.

Salesforce, a versatile and powerful platform, can be harnessed to streamline your MTD for VAT obligations. This article will walk you through creating MTD for VAT on Salesforce, ensuring you remain easily compliant. By integrating a comprehensive accounting solution to your Salesforce platform you can automatically calculate your VAT return and make it easy to submit your VAT return directly to HMRC.

What Is Making Tax Digital?

Making Tax Digital (MTD) is a pivotal step in moderni​zing tax systems. Its primary importance lies in streamlining tax processes improving efficiency and automation. MTD also enhances compliance through real-time reporting and digital records, making tax evasion more challenging and fostering a fairer tax system. It promotes transparency, building trust between taxpayers and tax authorities.

In ​The UK in 2019, Her Majesty’s Revenue and Customs (HMRC) launched Making Tax Digital (MTD) to simplify tax compliance and reduce errors through digital technology. MTD mandated that all VAT-registered businesses use MTD-compatible software to maintain digital VAT records and submit VAT returns.​

Due to the MTD rules, starting from April 1, 2019, businesses with a taxable turnover above £85,000 had to maintain digital VAT records and use MTD-compatible software for VAT returns.​ By April 2020, digital data exchange for VAT became mandatory between all business software. MTD VAT returns now rely on digital records, providing 9 boxes of information.​ From November 2022, unregistered businesses are automatically enrolled in MTD unless exempt.

The Key Objectives of MTD

  • Simplify Tax Compliance: Streamline the process of reporting income, expenses, and tax liabilities.
  • Reduce Errors: Minimise the occurrence of mistakes in tax calculations and submissions.
  • Improve Efficiency: Enhance the efficiency of tax administration and reduce the administrative burden.
  • Increase Revenue Collection: Improve the accuracy of tax collections and reduce tax evasion.

How to Automate MTD for VAT on Salesforce

Understand the MTD for VAT Requirements:

  • Sign up for Making Tax Digital for VAT with your accounting application on Salesforce. In the email you receive, confirm that you can submit returns using software that’s compatible with Making Tax Digital for VAT. After you’ve signed up, you cannot use VAT online services to send VAT Returns. Ensure you configure the app to match your organization’s VAT requirements, including VAT rates, tax codes, and reporting preferences.

Authorize to Submit MTD Compliant VAT Returns:

  • Salesforce allows you to access external website resources for your organization. The HMRC Making Tax Digital for VAT website first needs to be registered and activated with remote site settings. Once the site is activated, it can be used within your accounting application on Salesforce to communicate with HMRC. Your accounting software on Salesforce must have VAT functionality and MTD compliant.

Prepare Your VAT Return:

  • Calculating the VAT Return doesn’t affect your transactions, and no postings are made to your nominal codes or the general ledger. This means that you can calculate your VAT Return as many times as necessary. However, when you mark your ledger records as being reconciled, this prevents them from being automatically included in a future VAT return calculated in your accounting app for Salesforce.

Submit MTD for VAT Compliant VAT Return To HMRC:

  • Once you have reconciled your VAT return, submit your VAT return to HMRC via your MTD for VAT connection. Ensure you have authorized your accounting solution to connect to HMRC. Navigate to the draft VAT return you wish to submit to HMRC. Confirm your Company and VAT Obligations are correct. Submit MTD for VAT to HMRC. Once submitted, you will receive a confirmation message from HMRC.

Generate MTD for VAT Reports and Dashboards:

  • Utilize your comprehensive accounting for the Salesforce application to generate VAT reports and dashboards that address the specific requirements of your business. These reports should include all the necessary data, such as transaction details, VAT calculations, and submission data. Ensure that the reports are compliant with the formatting and submission requirements of your tax authority. You can easily keep an eye on crucial financial metrics and extract valuable insights, simplifying the VAT management for your business.

Submit MTD for VAT Reports:

  • Setup and submit VAT Returns to HMRC via the Making Tax Digital. Streamline the VAT return process; generate VAT returns effortlessly and submit them directly to HMRC, saving you time and ensuring compliance. Using the MTD for VAT feature, you can submit your VAT reports directly to your tax authority. Salesforce can provide a secure and efficient means of transmitting this information, ensuring timely compliance with MTD for VAT requirements.

Access Real-time VAT Process:

  • Your accounting software on Salesforce would provide you with real-time access to the latest information regarding your VAT processes and all other financial operations, ensuring everyone in your organization has access to the same up-to-date information, promoting transparency and collaboration.

Summary

Creating MTD for VAT is a strategic move that ensures compliance with tax regulations and streamlines your financial processes. By understanding the requirements, selecting the right accounting solution on Salesforce, integrating your VAT data, generating reports, and maintaining ongoing compliance, you can leverage Salesforce to simplify your MTD for VAT obligations. Embrace the power of technology to keep your business VAT-compliant and free from regulatory hassles.

The Author

Bash Din

Bash is the Managing Director at Zumzum. He has over 20 years of experience in Salesforce.

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