HMRC plan to be fully digital by 2030 but are your VAT processes ready?
On 21 July 2025, HMRC published its updated Digital Transformation Roadmap, outlining its vision for a modern tax system that’s “digital by default” by 2030.
This isn’t a distant ambition. The roadmap reinforces a direction that’s already well underway. The underlying message is that VAT reporting must become faster, more accurate, and more automated and businesses need to adapt now.
What’s Changing?
HMRC is shifting away from paper-based filings and batch-based submissions toward a more real-time, digitalised tax model. The key highlights from the roadmap published include:
- Aim to have over 90% of all taxpayer interactions digital by 2030
- Broader use of APIs and structured digital records
- AI-based validation and error detection to improve compliance
- A stronger push toward real-time reporting and auditability
While this may build on the current Making Tax Digital (MTD for VAT) requirements, the scope and sophistication go much further. Under today’s MTD rules, businesses must maintain digital links, submit VAT returns via compatible software, and retain structured records electronically.
But this new roadmap suggests a shift toward more automated data exchange, fewer manual adjustments, and deeper system integration particularly for large and complex organisations.
For UK VAT registered businesses, this presents a fundamental change in how VAT is going to be managed by HMRC. It will no longer be sufficient to pull reports at the end of the month and check things manually. The expectation now is for clean, accurate data at the source and a seamless connection with HMRC.
The risk for businesses
Many companies still rely on time-consuming, manual workarounds to manage VAT compliance. Data is often only available after the reporting period, meaning corrections are made late and sometimes outside of the ERP system increasing the risk of:
- Human error
- Delayed filings
- Resource-intensive reconciliations
- Gaps in audit trails
We’ve seen a noticeable rise in HMRC’s MTD compliance checks over the past year with greater scrutiny on digital record-keeping, system links, and filing accuracy. This is a clear sign that enforcement of MTD is tightening, and that businesses still relying on spreadsheets or semi-digital processes may face growing compliance risks.
How Businesses Are Responding
Forward-looking tax teams are investing in smarter, ERP-native automation tools that streamline the VAT lifecycle from tax code assignment to final submission.
Two key shifts we’re seeing:
- Automated VAT Determination
Tools that automatically determine the correct VAT code at the moment of transaction based on real-time logic tied to product, customer, ship to jurisdiction, and supply chain flow dramatically reduce rework and risk and time.
- Digital VAT Compliance
Solutions that extract VAT data directly from a business’s ERP system, such as SAP, validate it automatically, and enable digital submission to HMRC help businesses move away from spreadsheets and middleware and toward fully integrated compliance.
What This Means for the Road Ahead
If your VAT compliance still relies on end of period exports, offline checks, or manual tax code assignments, now’s the time to reassess. The systems you rely on today may not be fit for the level of accuracy, traceability, and real-time readiness HMRC is moving toward.
At Meridian, we’ve developed tools specifically for SAP users navigating this transition:
Arco VAT Determination automatically applies the correct tax code at the time of transaction at a line item level, reducing rework and ensuring compliance is built into your SAP process from the start.
Arco Compliance extracts live data directly from SAP, enabling accurate VAT reporting and submission without waiting for month-end closures or manual reconciliations.
To explore how these solutions could support your tax team, get in touch with Meridian.