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With the right finance tool, VAT submissions and accounting can be very simple for NFPs to manage.
Albeit important, VAT reporting is one of the more mundane and frustrating parts of running a charity or NFP. Indeed, remembering the dates for submitting VAT returns and gaining full visibility of your payment history, as well as managing partial exemption rules and group VAT submissions can be challenging.
Therefore, it’s no surprise that organisations are constantly on the lookout for ways of making their financial reporting more efficient and as painless as possible. One method of doing so is by using Microsoft Dynamics 365 Business Central.
Dynamics 365 Business Central enables NFP organisations to make quicker, more informed decisions and connect with their customers in real time. It is an all-in-one, fully comprehensive Enterprise Resource Planning (ERP) solution which manages core business processes such as marketing, sales and finance in one place. Unlike its predecessor Dynamics NAV, Business Central runs on cloud computing technology allowing it to be accessed from anywhere with an internet connection, giving it an extra level of convenience. There are many benefits of Business Central, however, some of its main advantages revolve around how easy it makes VAT reporting.
Since April 2019, VAT-registered businesses above the VAT threshold have been required to store their tax records and submit VAT returns electronically. This was a result of HMRC switching to newer technology, an initiative known as Making Tax Digital. Microsoft Business Central is compliant with these regulations, with its design and powerful functionality making VAT-related activities straight-forward to complete.
As an NFP or charity you may only be able to claim some of your VAT back on activities you carry out. This can be complex to track, but the TES Dynamics 365 Business Central software supports you through this process. It allows you to backdate transactions, as well as retrospectively calculate your partial VAT exemption for the coming year. TES Dynamics 365 Business Central allows you to submit a VAT return through a group structure (multiple companies-both trading and charity companies), meaning you don’t need any bridging software which has the potential for loss of efficiency by pulling from Excel or an increased likelihood of errors.
In order to make electronic VAT returns, charities must first have a way of digitally communicating with HMRC. Business Central’s Making Tax Digital feature ensures this process is seamless. It contains most of the information needed to establish a channel of communication between you and HMRC. All that’s left to complete this connection is for you to authorise the Dynamics 365 Business Central MTD VAT app to interact with HMRC.
HMRC maintains a list of VAT obligations for businesses. These are periods in which organisations must report VAT and the due date for the report. Microsoft Business Central comes in particularly handy here, using this information from HMRC to remind you about upcoming VAT returns and any that are overdue. It also automatically enters a start and end date when you begin creating a VAT return.
In just a few simple steps, Dynamics 365 Business Central enables you to submit VAT returns for sales orders, invoices and credit memos. Furthermore, if you want to keep an eye on the status of your VAT, it gives you access to information from HMRC about your charity’s VAT liabilities and payments. This will also show you a track record of the payments you’ve already made to HMRC and any amounts that are outstanding.
As you can see, Business Central transforms VAT returns from a daunting process into one that is easily managed. If you’re thinking of investing in a finance system for the first time or upgrading to a new one, our team of Dynamics 365 Business Central specialists are on hand to help. Not only will they ensure the system is correctly implemented from start to finish, but they’re also there to guide you through the steps of setting up Business Central’s Making Tax Digital functionality. Get in touch today for more information.