How UK VAT Registered Businesses saved £915 million and 49 Million Hours on VAT Compliance (and why you can too)
VAT compliance takes more time than most businesses or teams realise, and the cost isn’t just in administrative hours, but in stressed teams, delayed priorities, and avoidable compliance filing risks.
According to HMRC’s latest research and analysis report, published February 2025, in relation to Making Tax Digital for VAT final evaluation, UK companies that embraced automation and digital tools saved a staggering 49 million hours last year on VAT related tasks alone. The total value of this time was estimated to be a cost saving of up to £915 million.
That translates to 40 hours saved per business every year which employees are freed up from tedious work like:
- VAT data collection
- Manual reconciliations
- VAT compliance checks on data
- Report generation
- Return submissions
That’s time no longer spent chasing and reviewing spreadsheets unnecessarily or stressing over submission deadlines. If your team is still stuck spending dozens of hours per quarter on VAT, you’re not just losing time—you’re burning your budget on inefficiencies and exposing your business to unnecessary costs and increased risk of penalties and costly errors!
Why Time Spent on VAT Still Hurts So Many Businesses
Many finance and tax teams are still stuck in manual, in-house processes such as spreadsheets, email chains, data extractions and last-minute checks. Often, key data is only available at the end of the reporting period, leaving no time to proactively address root causes in ERP systems and resulting in the same manual workarounds being repeated month after month.
This leads to:
- Hours of repetitive administration
- Higher risk of mistakes
- Late-night filing panics as data may only be available once the books are closed
- Valuable time pulled away from strategic projects
The approach you choose, whether it is in-house, outsourced, or automated, has a major impact on how much of your team’s time, energy, and brainpower is being drained by compliance.
Let’s compare
VAT Compliance Options – Pros & Cons Comparison
| Category | In-House | Outsourced | Compliance automation tool |
|---|---|---|---|
| ✅ Pros | -Immediate access to systems & data -Control over timing & adjustments, limited by data availability at month-end. | -Less internal time required -Predictable filing schedule -Suitable for complex, multi-country filings due to specialist knowledge | -More robust solutions have access to real time data -Provides flexibility to identify and correct errors well in advance of filing -Allows time to amend transactions within the -ERP system prior to submission, ensuring clean, compliant filings -Real-time dashboards & visibility -Automates data collection & submission -High accuracy with minimal human input -Reduces errors & speeds reconciliation -Scales easily across jurisdictions Frees team for strategic work |
| ❌ Cons | -Data only available post-period, limiting real-time insight and proactive decision-making -Time-consuming & labour intensive -Specialist VAT knowledge of multiple country requirements is required -Loss of knowledge due to staff turnover can be a challenge -Limited visibility as data only becomes available after the VAT period closes -Unable to change SAP data as the books may be closed -High risk of error & delays -Bottlenecks from over-reliance on key people -Competing with -internal priorities -Team bandwidth issues during peak periods -Increased pressure and risk of missed deadlines due to being short on time | Requires coordination to collect/validate data Delayed data availability means late insights and limited responsiveness Delays possible due to back-and-forth Less flexible for last-minute changes Some providers slow to respond to changes | Initial setup & integration effort Teams may resist switching from manual workflows |
| ⚙️ Efficiency | 🔴 Low | 🟠 Medium | 🟢 High |
| ⚠️ Risk Level | 🔴 High | 🟠 Medium | 🟢 Low |
| Bottom Line | Control comes at the cost of time, stress, and accuracy | Better than in-house but not built for speed or flexibility | Fastest, most resilient option, built to reduce VAT risk |
Conclusion
In-house VAT compliance can work, but it often drains time, strains internal resources, and increases the risk of errors.
Outsourcing helps reduce some of the burden, but it introduces new dependencies, can cause delays and coordination challenges.
By contrast, automation gives your team true speed, accuracy, and freedom. With a tool like the ARCO Compliance Tool, businesses can eliminate unnecessary delays, streamline VAT filing with confidence by pulling real-time transactional data directly from SAP. This continuous access to up-to-date data removes the constraints of standard month-end reporting cycles, enabling more timely and accurate VAT compliance.
Tools such as Arco Compliance are helping teams:
- Eliminate delays
- Reduce filing risks
- Pull real time data directly from SAP
- Save tens of hours each quarter across multiple teams
- Free up resources for what really matters
ARCO Compliance is the comprehensive VAT technology solution built specifically for SAP environments. Developed on the Business Technology Platform (BTP), our solution creates a seamless bridge between your SAP systems and tax authorities worldwide, transforming compliance from a periodic burden into a controlled, continuous process. Get more details here