New standard for VAT software

HM Revenue and Customs (HMRC) has announced a new standard for VAT accounting software and aims to see that all software supports the agreed new standard by the end of 2008.

Accountants often seek advice from HMRC officers and the VAT telephone advice service concerning VAT accounting software, but up until recently there was no standard by which products could be measured. In response to this customer demand, the VAT standard for accounting software has been developed in partnership with the British Standards Institution (BSI) over a period of eighteen months. It will allow HMRC to streamline the use of VAT software and ensure that it meets certain core HMRC requirements.

The new Publicly Available Specification (PAS) 76, is an independent technical specification detailing how accounting software should process VAT. Since most UK VAT registered businesses use accountancy software packages, the new standard should give businesses and HMRC greater confidence that VAT matters are being dealt with accurately and completely.

PAS 76 is designed to be compatible with UK VAT law, which will enable developers to design and produce software to specific HMRC requirements. Developers also have the option to put their software through the BSI kitemark accreditation process. Software will be independently assessed, and if it meets the requirement of the specification, it will be formally accredited and allowed to display the HMRC logo and BSI kitemark. This will provide the sort of recommendation that many VAT-registered businesses have been seeking.

HMRC intends to ensure that a good, consistent level of business practice is common across all VAT accounting software providers. The goal is to achieve increasing levels of voluntary compliance, which will benefit both HMRC and VAT-registered businesses alike, by getting their VAT transactions right first time, every time.