There’s no sugarcoating it: VAT returns are a not-so-glamorous part of accounting. But as you know, compliance-based work is always of huge importance. And the slightest mistake can pose much bigger consequences.
It’s why stress levels can sometimes reach extreme levels. We’re sure you’re familiar with the chase to collect and organise client paperwork and the routine checks to ensure that data is accurate. There’s so much to do before you even file the VAT return. So what can we do to improve this process?
Well, believe it or not, VAT returns don’t have to be the arduous battle we make them out to be. With the right approach, system and tools, you can reduce the administrative burden and the pressure that comes with such responsibility.
In this blog, we’ll share a brief overview of what firms should be doing when trying to improve their VAT returns process. So treat this as a starting point if your firm needs to rethink its strategy.
1. Set up a central calendar
Call us old fashioned, but you can’t go wrong with a calendar. Whether it’s sophisticated strategic management software, or pinned to the wall in your office, a VAT returns calendar is a great point of reference. As you know, VAT return deadlines can vary. Some staff might be doing them on behalf of their clients on a quarterly basis, while others work on a month-end schedule.
A centralised calendar, no matter how simple it appears, allows you to align your firm’s entire VAT returns strategy. If anything, it’s the basis from where all the work you do around VAT starts. You can be proactive both internally and with clients by monitoring and managing upcoming VAT deadlines well in advance. Sometimes, there’s no need to reinvent the wheel; the best tools are often the ones we already use day in day out.
2. Streamline VAT submissions
Once you’ve established a central management system (or calendar), next is ensuring your team gets the paperwork they need, when they need it. Think of this as the first official step of the VAT returns process.
Much of VAT return stress stems from chasing clients for paperwork. In an ideal world, your client will work to a regular schedule that reminds them when they need to send you theirs. But this is accounting – and those ideal ‘clockwork’ scenarios are hard to come by. Whatever your client’s submission process, there will always be an element of chasing.
So how do we make it easier for clients? Like the calendar concept, it’s worth setting clear expectations around deadlines, and parameters that allow you to better work together. Certain clients may have set ways of working, so it’s up to you to ensure the way you communicate accommodates that. Look to build a process that combines robust deadlines and solid communication. This should avoid, or at least reduce, last-minute work and late nights.
Other options include automated receipt-scanning technology like Dext Prepare. It removes the need for clients to send you their paperwork manually. Instead, they can submit paperwork via multiple methods. One photo extracts all the information they need from a receipt, bill or invoice, which is then automatically uploaded to Prepare and through to your accounting software. Getting client paperwork can be long-winded with a lot of back and forth. Technology helps to shorten that process.
3. Track data quality
Quality control is one of the most sought after aspects in accounting – and it’s at this point that it comes into its own. Once you’ve got all the paperwork you need, it’s time to check that it’s accurate. In an ideal world, clients will provide you with a regular flow of paperwork, allowing you to check for accuracy well in advance. That means there’s a lot more breathing space and far less panic when a VAT deadline looms. But, as we know, monitoring the quality of your client’s bookkeeping is easier said than done.
With VAT returns, it can sometimes be a case of ‘where do I start?’. You need to check whether bank transactions are fully reconciled. Are there some without paperwork? Or does the bank statement balance in the accounting software actually match the period in review? We’re only scratching the surface.
To help you find the answers, here’s a set of questions you can refer to when checking for data quality.
- 1 – Check that the bank statement balances in the accounting software match with the balance in the actual bank account related to the client’s business
- 2 – If the balances don’t match, check no transaction periods are missing from the bank feed (or bank statement extractions)
- 3 – If there are missing periods, check when the bank feed broke and import the missing transactions however you usually would
- 4 – Check which transactions do not have matching source documents
- 5 – Request missing paperwork from the client
VAT return success is largely built on assurance and quality control which, in turn, gives your team confidence that the work they’re carrying out is as good as it can be. When so much of work is to do with minor, granular detail, there is no substitute for accuracy.
4. Standardise your management accounting strategy
There’s a common theme to all this. To ensure your firm’s VAT returns run like clockwork, you need to install an organised, accessible and adaptive framework. If we’re to sum up what that looks like in one word, it’s standardisation. When you standardise any compliance-based work, you align all the intricate and, at times, disconnected workflows that operate within a firm.
For a VAT return to be successful, you need complete visibility and open communication lines between those working on it. Perhaps that’s strategic management software or even a calendar. But the key is to build a system that everyone can both see and buy into. In time, that will pave the way for efficient client relationships, accurate quality control and, most importantly, correct VAT returns.
If you’d like to find out how you can further standardise your firm’s approach to VAT returns, look no further than our downloadable guide on Standardised VAT Returns. Inside, Paul Lodder, our Vice President of Accounting Strategy, explores standardisation in more detail – the essential checks you need to carry out and a step-by-step framework to follow when looking to improve your strategy. Click below to download.