Brothers Mark and Colin Sweetman are the co-founders of Botfiler, a VAT management platform that uses number-crunching bots to calculate liability at speed and help companies file their VAT returns quickly and on time. The company’s product for the Irish market, which works out local VAT 3 returns in less than five seconds, was launched in March.
“VAT calculations are prone to human error, the process can be slow to complete and there is often no central management system to ensure that returns are filed correctly and on time,” says Mark. “Botfiler does all the heavy-lifting while integrating with popular cloud accounting apps. We have built our VAT reporting bots in a way that enables practices to ‘keep it lean’ but still provide their clients with the best tax advice and cloud systems. We are official Xero [accounting software] partners and certified as such on their app marketplace.”
There are three main components to the Botfiler solution: API (application programming interface) integration, calculation bots that compile the VAT and connections to local EU/UK tax offices for ease of filing.
To use the system a business prepares VAT returns from its existing Xero account, connects with Botfiler and creates VAT3 bots for each client. Once the VAT codes are mapped, the user selects the VAT period dates, Botfiler fetches the data from Xero and computes the return, which can then be marked as filed with Revenue.
Botfiler beginnings
The Sweetman brothers are chartered accountants who ran their own practice, which specialised in ecommerce accounting for companies in Ireland and the UK, before setting up Botfiler in 2021.
“From working with clients, we could see the difficulties experienced by ecommerce SMEs in Ireland and the UK in reporting cross-border VAT quickly and accurately,” says Mark. “Secondly, in 2021 both the EU and the UK introduced new cross-border VAT rules, which brought over 40,000 UK and 250,000 EU businesses within the scope of VAT reporting for the first time.”
This left SMEs facing a choice between incurring high compliance costs or ignoring the rules and letting their customers pay the VAT at the port. Neither option was satisfactory so the brothers decided to design a system that could provide a fast way of reporting VAT at reasonable cost while also creating new market opportunities for SMEs by removing cross-border tax as a barrier to trade.
Colin adds that DAC 7 (the seventh directive on administrative co-operation) is also of significance as it increases obligations on online marketplaces to report sales activities of their sellers from 2023. “This will mean a lot of non-compliant sellers will soon be detected by the EU so it’s imperative they report and charge VAT to all EU customers,” he says.
Existing tools for VAT reporting are typically aimed at enterprise-level organisations and as such are large-scale and expensive. “Our aim was to bring a cost-effective, automated solution to market for SMEs, and our product will be of interest to accounting firms, fiscal representation companies [tax registered entities that act on behalf of companies doing business in overseas markets] and individual companies. The reason for this is simple,” says Mark. “SMEs generally rely on their accountants to look after all their tax-compliance issues.”
Botfiler is an SaaS solution with different subscription packages to reflect user numbers. The company is based in Dublin, where it employs five people and the next step is to launch into the UK followed by key markets in the EU including France, Germany, Italy, Spain and the Netherlands. Investment to date has been a combination of €100,000 and sweat equity, with support coming from Enterprise Ireland, the Bolton Trust and LEO South Dublin. Botfiler is now preparing for a funding round to move into the UK market by the end of 2022.
