The integrity of accounting software is essential to business. One small error can have serious consequences for corporate finances, from compliance to tax issues. For HM Revenue & Customs (HMRC) in the UK this is a significant problem, as it cannot test every business transaction. It relies on the integrity of corporate accounting software to ensure that accurate tax returns are produced.
This is why BSI was asked to help develop a specification for accounting software that could be assessed and Kitemark certified in order to harmonize Value Added Tax (VAT) reporting in the UK. BSI worked with HMRC to create a Publicly Available Specification (PAS) Accounting software. Value added tax in the UK. Specification, which aims to:
- form the basis of an accounting systems that facilitates the production and retention of VAT accounting records and declarations
- provide warning of potential VAT errors by applying controls to data input and processing
- offer the ability to self-audit records for VAT purposes by way of reports that apply tests to the retained data to assist in the identification of potential errors, transactions inconsistent with expected or known business activities, and transactions that make up any declared totals
- offer the ability to make accounting data available to HM Revenue & Customs auditors or other third parties
- offer the ability to provide the information needed to evidence the accuracy and completeness of any VAT-related declaration.
In short, PAS 76 specifies requirements for accounting software which records, creates and stores transactions relevant to outputs, output tax, inputs and input tax, and which supports the reporting of them for declaration on a Value Added Tax (VAT) return. It covers VAT processing for:
- input controls
- data recording and reporting
- provision of user self-audit and related reports
- provision of functionalist for downloading VAT audit data
- user documentation relating to specific VAT issues.
PAS 76 does not cover Intrastat report, Margin Schemes, Retails Schemes, and the Capital Goods Scheme.
Note: It is assumed in standardization that users of standards will comply with the law. This PAS does not therefore make it a requirement that users comply with particular legislation; however, relevant legislation has been drawn attention to.