We are just one of many companies whom are developing a Making Tax Digital (MTD) solution that promises to ensure compliance come 1st April this year – less than 70 days away! A single look at the MTD software page on the HMRC website will tell you that, everyone is claiming theirs is the best and the one to choose. We are obviously claiming the same, however in the case of IFS customers, ours is the one to choose. We say this with confidence as not only is our solution the first to market but we have brought over 20 years of software development and IFS experience to bear.
We have been very careful not to overengineer our solution but are absolutely mindful of the critical nature of this solution to people’s businesses – getting tax wrong is not an option. Getting the right balance to ensure our solution is easy to maintain and support, is built with extensibility in mind, (the HMRC Making Tax Digital for VAT is just a start), but that is simple to use with a low cost of ownership was very much our focus.
We are proud of the solution we have developed and here are just 5 reasons why we believe it is the best option for your business.
1. It’s straightforward
Our MTD solution only contains 3 component parts:
- The IFS MTD Agent – a small software program that resides on premise and has very little footprint. This is the conduit between IFS and our cloud solution
- The API – a secure web API hosted in Azure that lives ‘in the cloud’
- The CS MTD web application – hosted in Azure providing an easy to use console to view MTD information and provides the integration with the HMRC APIs for both sending and receiving VAT related data.
As solutions go, that’s pretty simple. We have created a straightforward solution that performs a business critical task. TrAX Digital for IFS is a cloud-based solution, only the IFS MTD Agent needs to be installed on your server so that it can access both IFS and have internet connectivity. The agent communicates over HTTPS with SSL encryption to the Cooper Software Cloud API so there is no risk to data.
Why did we choose a cloud-based solution? Well, for many reasons (which I’ll cover later) but a key driver for us was ensuring we can provide a solution that would benefit customers now and in the long term. If we went entirely on premise, our solution would have to account for the different IFS versions currently in use by UK customers, along with HMRC who have stated they will be adding further requirements to the process once the initial launch has settled down – this would mean customer’s would be continually installing updates and patches for any bug fixes or new functionality. A single solution in the cloud allows us to respond more flexibly to changing requirements (from customers and HMRC) but also provide a level of support to customers that befits a business-critical solution.
On the subject of the cloud, David Mitchell Smith, VP and Gartner Fellow commented: “As it enters its second decade, cloud computing is increasingly becoming a vehicle for next-generation digital business, as well as for agile, scalable and elastic solutions. CIOs and other IT leaders need to constantly adapt their strategies to leverage cloud capabilities.”
2. It’s secure
The notion that the cloud is unsecure is outdated. In truth, many organisations (ourselves included) run their business on software hosted in the cloud. This is shown by the fact that 70% of businesses run at least one application in the cloud and ensuring security of your data is the number one priority for cloud service providers. IFS themselves offer a cloud version of their software and in their Q3 2018 results they reported a sixfold increase in Cloud and SaaS revenue.
As well as IFS, companies like Xero, Sage and QuickBooks all offer fast and efficient cloud-based accounting software, the benefits of this approach (highly available, scalable, greater visibility and so on) far outweigh any security concerns.
To guarantee security, the data within our MTD application can only be viewed by an authenticated user. We use OAUTH2.0 token-based authentication to ensure a secure authentication. This token contains a unique identifier to ensure only data relevant to the user is able to be accessed. Once authenticated, the user can access the MTD console and submit VAT returns to HMRC after confirming the data.
3. It’s flexible
A solution such as this needs to be “elastic”. That is, there will be many periods throughout the month/quarter that the solution will have little demand. However, given the nature of tax reporting, there’s likely to be days in the month where the solution is suddenly in high demand. Everyone is logging on at the same time to perform the same function. This could cause problems if the solution is not properly engineered and on a platform that supports such peaks and troughs. Our solution has been architected and designed to be robust enough to cope with surges in demand. What’s more, because it is in the cloud, its high availability is a given.
4. It’s future proof
TrAX Digital for IFS has been designed to ensure compliance as MTD evolves. When HMRC change their API, we can react – without impact to our customers. Because the solution is in the cloud, if more data storage is required, we can react. There’s no need to install new software or update existing solutions to meet upcoming changes and new legislation. There’s no 3rd party involvement – if a solution uses 3rd party software to send the return to HMRC, what happens if this element of the solution fails? Who is responsible for product support?
5. It doesn’t rely on spreadsheets
As well as emphasising the benefits of digital record keeping for businesses, HMRC are pursuing the digital route, largely to reduce tax errors and generate extra revenue. It is estimated that HMRC is missing £9.4 billion in tax revenues due to errors and ‘failure to take reasonable care’ in submissions. By digitising returns via MTD, it hopes to close this element of the tax gap.
Spreadsheets are significant here. A spreadsheet can be easily changed or information mis-keyed. HMRC have said that most businesses can continue to use spreadsheets for record keeping but these must be combined with compatible software, capable of connecting to HMRC systems via an Application Programming Interface (API), when making submissions to HMRC. The use of ‘copy and paste’ between spreadsheets does not constitute a digital link. One of the key tenets is that there should be no manual intervention in the MTD journey which clearly, a spreadsheet allows easily.
Although during the ‘soft landing’ phase up until April 2020, HMRC will accept spreadsheets where there is no digital link, from 2020 this will not be the case. That said, even now, HMRC continue to be challenged by Government to remove the acceptance of spreadsheets so the 2020 date could shift closer. One thing is for sure however, and that is, any MTD solutions that use spreadsheets and do not have a ‘digital link’ will not be acceptable in the longer term.
Our solution does not use any spreadsheets. It is fully integrated with IFS and has been designed to support any future enhancements that HMRC will introduce going forward.