Automating the Tax Tangle of Exports
Exports are of vital importance to any open economy and are worth £511 billion to the UK (in gross terms). Looking to capitalise on the improvement in global connectivity, the UK government urged businesses to make 2017 the ‘Year of Exporting’ – a theme that we expect to see extend into this year.
Exports and global trade continue to be a key route to growth for the country, though international trade operations are already becoming more onerous as we discuss leaving the EU and its associated customs union. However, the challenge of doing business across multiple markets is that VAT becomes considerably more complicated, the more countries you deal with. Every single transaction has tax implications, so registration, invoicing and filing can be a silent but significant burden if not managed appropriately.
Despite this, we know that 80% of UK businesses still rely on spreadsheets to keep track of their international VAT obligations. This is a time consuming, and generally error prone way to map such a crucial area of finance.
In light of this issue, we commissioned some research with CEBR (Centre for Economics and Business Research) to highlight the tax compliance tangle that comes with exporting, and the impact it can have on businesses. Shockingly, our research shows that manual VAT compliance is costing UK exporters at least £2-3 billion per year. This level of inefficiency and wasted productivity is a particular concern given the global shifts towards greater transparency and real-time VAT reporting, which will present fresh challenges for both existing systems and in-house expertise.
Businesses can no longer afford to overlook the productivity gains that technology can offer to help them maximise their profits, and compete on a global stage.
To see more stats and findings, take a look at the full report here.