Cloud accounting software helps businesses save substantial time and money, a major study has revealed.
The finding forms part of new research examining the impact of Making Tax Digital (MTD) for VAT in the workplace.
Launched in April 2019, the digital accounting scheme significantly changed the way businesses were required to account for VAT. This includes using MTD-compliant cloud accounting software – such as Xero or QuickBooks – to keep VAT records and submit VAT returns digitally.
But the study, published by HM Revenue & Customs (HMRC), reveals that fully compliant software offers many more benefits than just those helping businesses meet their legal obligations.
According to the report, firms who use cloud accounting software are:

• more likely to report that the benefits of doing so “outweigh” the initial investment or ongoing costs
• are “more confident” in getting tax right; and
• are more likely to report a reduction in time spent checking submissions.

And while seven in 10 (69 per cent) businesses reported “at least one benefit” from using MTD, businesses who use fully compatible software are more likely to experience multiple benefits.
This includes “submitting VAT returns faster”, “spending less time on record keeping”, “becoming more confident with technology”, and “reducing the potential for mistakes in VAT returns”.
The report comes ahead of the expansion of MTD in April 2022, making MTD for VAT compulsory for all VAT-registered businesses, regardless of income.
This will be followed by MTD for Income Tax in April 2023 and MTD for Corporation Tax in April 2024.
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