One of the primary goals of any tax expert is to engage in productive operations that drive performance and profits. On the path to achieving that goal, it is easy to get caught up with administrative measures. Tax professionals know too well how complicated rules and regulations can be and how much time and resources can be spent on maintaining compliance and managing input VAT reclaims correctly. It is even more important to have an efficient system in place that reduces costs and thus maximizes ROI for both professionals and clients.
Most inefficiencies arise in the processing of tax compliance. PWC’s Paying Taxes 2020 report provides figures on the hours taken for VAT refund compliance (Page 42). Globally, it takes 18.2 hours on average to comply with a refund. This means that resources are used for operations that would otherwise bring in more profitability.
*Source: https://www.pwc.com/gx/en/paying-taxes/pdf/pwc-paying-taxes-2020.pdf (page 6)
VAT recovery requires a specialist’s care and handling. An automated VAT recovery software can be of great support to a tax professional here in order to avoid several critical mistakes such as applying the wrong rates of value-added tax or treating expense categories incorrectly. We summarized five points for you on how to cut VAT refund processing time in half.
Easy data transfer
Handling mass data manually is always a tedious process and can take hours until a preferred outcome is achieved. Hours of manual labor are not only inefficient, but most of all very costly. With an automated solution for VAT recovery and an API connection to your clients’ system, bulk data transfer is vastly simplified and less prone to errors in formatting. A variety of data uploading formats should be prioritized when choosing a platform for managing VAT reclaims in order to be flexible for your clients and their preferred ERP or T&E systems.
SMARt data processing backed by AI
In order to be eligible for VAT recovery, a document needs to follow formal invoice (or simplified invoice) requirements. Since it can be challenging to assess manually all of your clients’ invoices and receipts, an automated detection feature backed up by AI offers a great solution to identify invoices that are potentially non-compliant. This way missing invoice requirements (e.g. the claimant company name, invoice number and date, etc.) as well as proforma invoices, duplicates, copies, or other specific transactions are detected and can be disqualified for VAT recovery. If an invoice is incorrectly issued, they can sometimes be subsequently corrected. For example in Germany, there are 3 ways to rectify incorrectly issued invoices.
Batch processing is key
Linking to the previous point, batch processing allows you to manage specific types of expenses or re-confirm previous processing. Processing a batch of filtered invoices one after the other to assess a certain requirement for VAT recovery is a feature which saves a lot of time and vastly increases efficiency.
The regulatory climate around taxation is always changing and never staying the same. Often independent professionals are lacking the resources or partially knowledge to be compliant with VAT rules in different countries. When it comes to value-added tax, different goods and services are treated with varying percentages, restrictions, and exemptions. Monitoring tax compliance through manual processes involving humans can lead to a higher number of errors. An online VAT recovery platform that uses machine learning and automation, however, can keep track of over 2.000 tax rules and ensure businesses keep up with the law at all times. For an overview of all VAT rates in Europe and deductibility categories, check out our free VAT rules map.
ELECTRONIC CLAIM SUBMISSIONS
Once all data has been processed, a VAT refund management system walks you through the process of preparing the VAT claim for submission. Instead of gathering documents and looking up submission requirements manually, you are provided with a step by step process. Submitting claims electronically is especially advantageous because you do not require a designated access to a certain tax admin portal. This also opens up the possibility for tax professionals to offer a broader scope of services to their clients.
An automated VAT recovery solution such as VAT4U's becomes the perfect remedy for tax professionals looking for an efficient DIY solution. When using VAT4U, claim process time is reduced by a whopping 68%. By leveraging our technology and VAT expertise, we significantly minimize any effort or time required from the user's side. Compliance with country-specific rules and regulations is automated, as well as data processing and claim submission procedures. Find out how our platform works and how you can use it yourself.