How eCommerce & Point of Sale providers can use HMRC’s Making Tax Digital program to their advantage
The final stage in HMRC’s composite Making Tax Digital (MTD) program is looming. Originally introduced in April 2019 with the aim of “making it easier for individuals and businesses to get tax right and keep on top of their affairs”, the requirement to maintain digital records and use MTD-compatible software to submit VAT returns initially only applied to VAT-registered businesses with a taxable turnover above the VAT threshold of £85,000.
However, by April 2022, all VAT-registered businesses must have implemented the necessary steps to remain compliant with the Government’s MTD requirements.
In the run up to the deadline, eCommerce and Point of Sale (POS) providers should consider how best to support their SME customers as they seek to comply with MTD.
What opportunities does MTD present?
MTD will catalyse the growing trend towards connectivity between software providers. The modern SME increasingly expects the services they rely on to run their business to work together. Forward-thinking eCommerce and POS providers can capitalize on this – and in doing so create deeper relationships with their customers – by making their platforms work seamlessly with accounting packages.
What do eCommerce and POS providers have to gain?
Regardless of the MTD deadline, business owners simply don’t have the time or inclination to spend hours manually reconciling their accounts. By enabling seamless integration between the eCommerce or POS platform and their accounting system, SMEs are able to eliminate costly and time consuming manual bookkeeping and increase the accuracy of their accounts.
Ultimately, by offering a stand out service which improves customer satisfaction, providers will be able to attract and retain businesses as loyal and fruitful customers for years to come.
When commenting on their partnership with Codat, Stephane Koch, Corporate Development Manager at iZettle stated, “iZettle are dedicated to providing small businesses with the best tools to build their business and allowing our products to fit neatly with the rest of the software they use is vital for us. Codat has allowed us to offer a market-beating product without a huge development spend.”
The accounting software market is changing.
There are clear signs that Making Tax Digital has already accelerated the development of the UK accounting software market, allowing it to diversify with new and nimble accounting packages. Research conducted by Codat in July pays tribute to this, showing in particular how well-funded players from other geographies are investing heavily in marketing their cloud products in the UK, resulting in an increasingly fragmented market.
What does this mean for eCommerce and POS providers?
Given the particularly competitive landscape of the UK accounting market, eCommerce and POS providers must strive to ensure extensive coverage in order to adequately serve their customers. Partnering with just one or two accounting platforms is sure to isolate a large proportion of their customer base.
Building a full set of integrations to include all the leading accounting packages used by small businesses can take even the most dedicated and experienced team years to complete. Even once the integrations are in place, the hard work is far from over. Automating accounting is complex and ensuring that your integrations remain up to date and consistently meet a wide variety of edge cases requires constant and significant resources.
How can Codat help?
Codat helps eCommerce and POS providers connect their customers’ businesses with their accounting packages: seamlessly synchronising every transaction across services.
Codat provides direct integration to all leading and Government-certified accounting platforms, such as Sage, Xero, Quickbooks and Microsoft Dynamics. By partnering with Codat, eCommerce and POS providers can unlock 80% of the UK accounting software market via our single API.
Codat maintains and monitors each connection so you don’t have to. The Codat platform is designed to make it easy for eCommerce and POS providers to connect with accounting packages, and tools like the Sync Health Site make ongoing support simple.
To find out more about how Codat can help your business, please contact firstname.lastname@example.org.