# Becoming data-ready for MTD for Corporation Tax: aligning VAT and CT Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-07-18 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: Synergising VAT and CT Processes for MTD: What You Need to Meta Description: Stay ahead of mandatory online tax submissions for VAT and follow upcoming changes for CT by 2026. Explore tech impacts & potential outsourcing options. URL: https://financedigest.com/becoming-data-ready-for-mtd-for-corporation-tax-aligning-vat-and-cthtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/istock-1129810557-1736815576394-compressed.jpg) _![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/russell-gammon-1736815576478-compressed.jpg)_ _By Russell Gammon, Chief Solutions Officer at_ [_Tax Systems_](https://www.taxsystems.com/) Now that HMRC’s Making Tax Digital (MTD) VAT requirements have kicked-in, all VAT-registered businesses are subject to mandatory online MTD submissions. But as the rollercoaster digitisation of the tax system continues, there are further changes to keep financial leaders on their toes – a similar initiative for Corporation Tax (CT) is to follow by 2026. All organisations, irrespective of size, must understand the requirements – both current and imminent – and revise strategies to be well-positioned for when the final regulations are in place. Until now, there’s been little incentive to synergise reporting of VAT and [Corporation Tax](https://www.financedigest.com/top-north-east-financial-adviser-firm-talks-corporation-tax.html "Top North East financial adviser firm talks corporation tax") due to their different delivery timescales, processes and requirements. Yet MTD for CT throws up some new deliverables to add to the annual return in the form of mandatory quarterly reporting of [key accounting](https://www.financedigest.com/b2b-specialist-pr-agency-the-digital-voice-announces-three-key-account-wins.html "B2B Specialist PR Agency The Digital Voice Announces Three Key Account Wins") data-points. Knowing the process is vital to [avoid inaccurate data](https://www.financedigest.com/the-race-to-avoid-data-dinosaur-extinction.html "THE RACE TO AVOID DATA DINOSAUR EXTINCTION") calculations and non-compliance penalties by not closely aligning the VAT and CT processes. **Synching [VAT and CT tax](https://www.financedigest.com/goodbye-to-all-vat-eu-indirect-tax-after-brexit.html "GOODBYE TO ALL VAT? EU INDIRECT TAX AFTER BREXIT") processes** Since the current [system doesn’t necessitate leveraging data](https://www.financedigest.com/interoperability-of-data-to-accelerate-the-ventilator-test-systems-market.html "Interoperability of data to accelerate the Ventilator Test Systems Market") across multiple tax streams, many businesses risk being underprepared for what’s to come. Typically, disparate teams manage the CT and VAT processes, drawing from different [data sources at different times](https://www.financedigest.com/decision-making-in-times-of-crisis-should-they-be-based-on-gut-feeling-or-data.html "Decision-making in times of crisis: should they be based on gut feeling or data?"). These [teams currently do not need to collaborate](https://www.financedigest.com/ensuring-remote-teams-efficiency-with-digital-collaboration.html "Ensuring remote teams’ efficiency with digital collaboration"), or even to connect. There are different tax return cycles too, with CT filing twelve [months following the accounting year](https://www.financedigest.com/independent-study-finds-infinidat-storage-can-provide-customers-125-roi-over-three-years-and-payback-in-less-than-six-months.html "Independent Study Finds INFINIDAT Storage Can Provide Customers 125% ROI Over Three Years and Payback in Less than Six Months") end, and VAT either monthly or quarterly, reporting 30 business days after. VAT operates on near-term [data](https://www.financedigest.com/data-integrity-the-holy-grail-of-operational-efficiency.html "Data integrity: the holy grail of operational efficiency") whilst CT operates on data that has long since been checked and finalised, meaning there’s minimal overlap of both processes. However, the introduction of MTD for CT requires a slick synergy of both processes like never before. **[Impact of tech on the tax](https://www.financedigest.com/equinor-evaluating-impact-of-british-windfall-tax-on-projects.html "Equinor evaluating impact of British windfall tax on projects") system** It’s interesting to consider ways in which MTD for CT might manifest itself in the [tax industry](https://www.financedigest.com/german-industry-calls-for-delay-to-global-minimum-tax-bdi.html "German industry calls for delay to global minimum tax – BDI") over the next few years. Tax data will no longer be dealt with twice, as the current CT and VAT processes dictate. This provides a golden opportunity for organisations to embrace technology to streamline processes, and even to [create new roles](https://www.financedigest.com/banning-russian-aluminium-would-create-uncertainty-about-lmes-role-rusal.html "Banning Russian aluminium would create uncertainty about LME’s role -Rusal") within the tax team. It’s not a stretch to imagine a new role such as the tax data expert being created, whose [responsibility is to ensure the quality and integrity of the data](https://www.financedigest.com/aon-introduces-new-cyber-solution-in-response-to-eu-regulation-on-data-protection.html "Aon introduces new cyber solution in response to EU regulation on data protection") for tax purposes. [Considering this sooner rather than later may alleviate pressure in what always seems to be a sudden changeover period in operating](https://www.financedigest.com/europes-wizz-air-considering-a-saudi-operating-license.html "Europe’s Wizz Air considering a Saudi operating license") model changes. **Is outsourcing an option?** How to handle the added workload for these changing tax processes [needs careful consideration](https://www.financedigest.com/institutions-need-to-consider-spreadsheet-management-to-meet-the-pras-latest-stress-testingexpectations.html "Institutions Need to Consider Spreadsheet Management to Meet the PRA’s Latest Stress Testing Expectations"). This may be dependent on many factors, including the size, type, and industry a specific organisation operates in. The two [options are to source tax](https://www.financedigest.com/3-options-to-consider-when-you-owe-the-irs-back-taxes.html "3 Options to Consider When You Owe The IRS Back Taxes") compliance from within or to outsource this. It’s reported that currently in the UK, [85%](https://assets-eu-01.kc-usercontent.com/220a4c02-94bf-019b-9bac-51cdc7bf0d99/8d2a0c42-3487-4156-b918-34077d698df5/MTDForCorpTax.pdf) of CT returns are outsourced to agents for calculation and filing, however there’s a significantly lower figure for VAT returns. The [proposed MTD for CT may see](https://www.financedigest.com/euro-7-emissions-proposals-the-sequel-europes-carmakers-dont-want-to-see.html "Euro 7 emissions proposals, the sequel Europe’s carmakers don’t want to see") more organisations bringing these filings back in-house to improve the alignment between the tax processes. Either way, it’s likely that both processes will be handled on the same basis – either in-house or outsourced – to [build in efficiency](https://www.financedigest.com/effectively-efficiently-build-financial-trust-customer-journey.html "Effectively and efficiently build financial trust on the customer journey") and accuracy. This may spark the [development of new business](https://www.financedigest.com/reasons-to-hire-a-web-developer-for-your-business-website.html "Reasons to Hire a Web Developer for Your Business Website") models, where tech plays an increasing role. For instance, co-sourcing, whereby a corporation and their outsourcing partner [work closely together to deliver tax](https://www.financedigest.com/eu-us-working-on-deal-to-make-ev-minerals-eligible-for-tax-credits-eu-official.html "EU, US working on deal to make EV minerals eligible for tax credits -EU official"). **Using data-based tax calculation tools** As regulation and technology are introducing a fully [digital tax](https://www.financedigest.com/self-employed-taxpayers-and-making-tax-digital.html "Self-employed taxpayers and Making Tax Digital") system to improve accuracy, the current autonomous corporate approaches of CT and VAT are set to give way to a unified, data-driven approach to tax filings. In fully integrating the tax teams with shared data, [a single source of truth](https://www.taxsystems.com/blogs/a-single-source-of-truth/) will be created in the form of a reliable set of source data that can be repurposed for any tax. The new generation of UK-specific VAT and CT applications [offers many benefits including increased](https://www.financedigest.com/carrefour-management-increases-offer-in-wage-talks-with-unions.html "Carrefour management increases offer in wage talks with unions") accuracy, the elimination of laborious data formatting, a more seamless process, de-duplication of tasks and improved employee productivity, as well as cost savings. Delivering over and above mere compliance, dedicated tax [systems enable more complex calculations and provide more timely](https://www.financedigest.com/it-is-time-insurers-act-smart-by-making-legacy-systems-a-thing-of-the-past.html "It is time insurers act smart, by making legacy systems a thing of the past"), precise and transparent data, which enables more intelligent decision-making. **Starting early for a smooth transition** It’s never too early for [organisations to commence revising strategies](https://www.financedigest.com/why-an-orchestrated-digital-identity-strategy-is-vital-for-financial-organisations-in-fighting-fraud.html "Why an orchestrated digital identity strategy is vital for financial organisations in fighting fraud") for tax compliance processes, ensuring the requirements of current systems align to MTD for CT needs. This may mean [investing in tax](https://www.financedigest.com/shell-to-evaluate-25-billion-pound-british-investments-after-windfall-tax.html "Shell to ‘evaluate’ 25 billion pound British investments after windfall tax") technology that integrates with new as well as legacy systems. By focusing on data quality and integrity first, [businesses will effectively synchronise their tax](https://www.financedigest.com/are-there-tax-breaks-for-business-health-insurance.html "Are there tax breaks for business health insurance?") operations for CT and VAT in a way which works for their specific organisation. Making this [move now will provide valuable time](https://www.financedigest.com/30-years-of-excel-lence-time-to-move-on.html "30 YEARS OF EXCEL-LENCE: TIME TO MOVE ON?") to allow for any preliminary adjustment or issues and ensure that you are ready well before the compliance deadline. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---