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AP automation and complying with UK tax law.

The UK rolled out a new tax initiative in 2019, Making Tax Digital. Its goal: to hoist the tax system into the modern day. Increased efficiency, effectiveness and ease of use are being championed, largely by – as the initiative states – making the system digital.

Much of the rollout has taken effect, but some will land in coming years. There are also rumblings about future rollouts to affect corporate tax and other, as-of-yet, unaffected tax categories.

Bottom line is, you need to go digital. Doing away with those tried-and-tested manual systems can be daunting, but it’s also a chance for opportunity.

At Zahara we’ve been helping people automate their accounts payable since well before HMRC was asking you to. We know a thing or two about it. Zahara software integrates with the business systems HMRC require you to use, streamlines your invoice processing and gives you real-time reporting. That opportunity we mentioned? We can help you comply with HMRC, and improve your operational efficiency. 

Zahara helps to complete all key aspects of the AP process.

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Understanding Making Tax Digital

You can find a full HMRC policy paper on Making Tax Digital click here, but we’ve outlined the key points below.

 

What does MTD require you to do?

• Use HMRC-approved digital software: You must ensure that your business software maintains digital records and integrates with HMRC. These include most of the major systems: QuickBooks, Sage, Xero etc. and a number of integrations, like Zahara.
• Maintain digital records: Records can longer be kept the old way. Everything from sales and purchase invoices, VAT details (rates, amounts, adjustments), as well as business income and expenses must be recorded and stored digitally. What they’re really asking for is a digital audit trail.
• Submit digital tax returns: All your tax returns must be submitted digitally through HMRC-approved software.

 

Compliance challenges

• Errors when processing invoices manually: If you process invoices manually, you’re using a system that’s time-consuming and inherently mistake-prone. Under MTD errors in financial reporting (miscalculations, omissions, and even typos) can see you slapped with penalties and subjected to audits.
• Complying with HMRC-approved platforms: Complying with MTD requires you’re able to ping VAT returns to HMRC using compatible software. Businesses handling accounts the old way, through complex, self-built systems or analogue bookkeeping, won’t be able to create the necessary digital link or keep digital records.
• Strained, outdated systems and the need to upgrade: You might need to upgrade your whole way of doing business to comply with MTD. It can be a costly and complex thing to roll out, but there are heaps of reasons why you should – and not all MTD compliance-related.

 

Here’s where we come in…

 

Compliance and then some: How Zahara helps

Zahara is a plug-in for all the leading business software. We automate accounts payable, and in doing so help you MTD. Digital invoice processing, VAT calculations, in-depth digital audit trails… we do it all.

 

We even bring benefits that go the extra mile.

 

How do we ensure MTD compliance?

Automated invoice processing: Our automated invoice processing software uses Optical Character Recognition and AI to read invoices and search for the minor discrepancies that could land you in hot water with HMRC.

This software will eliminate the errors that using a manual system is prone to – the kind of errors that won’t fly under the new tax initiative.

Detailed audit trails: Zahara will keep records of all transactions on a granular level. That means you can track transactions from the raising of a purchase order to the sending of a payment. All this information is then filed into your business software where HMRC needs it.

 

These audit trails will ensure you comply with MTD in terms of digital storage needs and the kind of document transparency HMRC requires.

Integration with HMRC-approved software: Zahara integrates with any business software worth its salt, including the ones covered in MTD.

Real-time reporting: Zahara software will report your financial information in real time, eliminating the reporting lag that you’d get from unenhanced business software. This real-time reporting will give you instant access to VAT summaries as well as the tools you need to spot discrepancies in your records before you submit them to the tax man.

Business benefits beyond compliance

Cost and time efficiency

Zahara’s invoice processing software processes invoices faster and more accurately than even the sharpest accountant could, saving your finance department time and eliminating the risk of errors.

Your invoices will be approved faster so payments can be made on time or early, improving relationships with your suppliers. What’s more, with all the time you’ve saved your finance team, they can now focus on more rewarding tasks, like finding ways to save you money or boost profits.

 

Scalability

Planning to grow your business? Zahara scales without trouble. In fact, it’s designed to handle high volumes of data precisely to suit businesses at all stages of growth.

This scalability will also increase the lifespan of your business software, giving you more time to make a decision about what business system to adopt when you outgrow the smaller-scale software. 

We even support multiple languages and currencies for when it’s time to go international.

 

Improved decision-making

That real-time reporting that’s keeping you in line with MTD will also give you much greater visibility over how company money is being spent.

With Zahara, you can assign budgets to departments or projects to prevent overspending. You can then see on a granular level how your accounts look across the board. These accounts will now also include future spending so that you can report into the future, making more informed business decisions driven by data.

 

A word from Zahara

Making Tax Digital is going to revolutionise the UK tax system. It might be a struggle for certain businesses – those running on legacy systems – but it’s also a great opportunity to bring accounts payable into the future.

Digital tax reporting will benefit you as much as it does HMRC. Making the jump to automated accounts payable eliminates many of the problems with handling AP manually.

We’ve got a great track record of helping companies make this jump (you can read our testimonials here). We genuinely believe that Zahara is the best route for AP automation. Not only will it help you keep in line with Making Tax Digital, but it will streamline your operations, free up staff, and save you money by keeping your bottom line low.