POS systems and tax office regulations

Before you buy or upgrade your POS system, it is important to be aware of the regulations that you need to abide by.

These can be broken down into two main areas: tax regulations and data security regulations.

While there have been recent regulatory changes to the latter, the good news is that a little reading can ensure that you are ready and compliant without too much hassle.

Here are the main points that you need to know.

What are the general trends in POS system regulations?

General Data Protection Regulation (GDPR)

The main change to data regulations came about in mid-2018 when GDPR launched across Europe.

The General Data Protection Regulation impacts point-of-sale activities in that transactions and data must be dealt with slightly differently in order to protect citizens’ right to data privacy.

Firstly, you will need a GDPR statement for your business, which clearly states how you store and use customer data from purchases. You will also have to gain consent from customers before you market your services to them, and have a protocol in place for erasing customer data on request.

The penalty for a breach is up to 4 per cent of annual turnover, so it needs to be taken seriously.

And while debit and credit card transactions are all covered by Payment Card Industry Data Security Standard (PCI-DSS) regulations, businesses need to be aware of the potential vulnerability of their data, which means keeping software up to date, notifying authorities within 3 days of any potential breach and having robust policies in place for dealing with issues.

Making Tax Digital (MTD) regulations

The government’s new MTD regulations are here, but if you’re using a POS system, you’re already well on your way to compliance, as your Daily Gross Takings are being automatically recorded.

And if you decide to use a POS system with cloud compatibility, then you’re already ticking many of the regulation boxes. Of course, the advantage to you as a business is that MTD will save you time by automating VAT returns and getting rid of self-assessment.

The other main advantage of this is that errors that could have previously seen you fined will be eliminated. And of course, digitisation means having a more visual, real-time handle on your finances, which ultimately leads to better forecasting and money management.

Taxation regulations

Depending on whether you’re operating at one VAT rate or multiple rates, the regulations differ slightly. For retailers who deal in standard, lower or zero rate VAT items, takings must be clearly separated, but the good news is that this can be done automatically by POS systems, as long as everything is set up correctly, with the right codes. POS systems can calculate VAT, separate rates and create aggregates while recording the history of all transactions to ensure compliance and complete accuracy.

Do I have to buy a new system due to new regulations?

In short, if you’re already using a good POS vendor, then you don’t need to buy a new system.

In fact, by using POS, you’re ahead of many businesses who aren’t yet doing so. Regulation is heading in the direction of complete digitisation, so having a POS system makes sense, and the market will only grow over time.

The importance lies in setting up correctly, and this is where you might want to pay for a tutorial or a premium service so that you are completely clear on everything.

If you’re not currently using a POS system, there has never been a better time to start doing so. Not only are there many options, but the developer companies all have to be compliant to be competitive, and you can be far clearer on how you will comply with MTD and GDPR.

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