Organizations based out in the United Kingdom have been operating Dynamics 365 Finance to directly connect their on-premises (locally installed) systems to His Majesty’s Revenue and Customs (HMRC) online services since the year 2019.
With this function, businesses are allowed to submit their Value Added Tax (VAT) returns digitally to HMRC under a project named Making Tax Digital (MTD).
However, the news is, as per the latest security regulations, this functionality is soon going to be discontinued for on-premises versions of Dynamics 365 Finance. Instead of that, a newest system will be imposed with additional security layers.
These latest security criteria will affect organizations that are using on-premises deployments of Dynamics 365 Finance.
Key Updates in On-premises Versions of Dynamics 365 Finance We Need to Come Across
Let’s discover the highlights of this entire security guidelines, what this new update has to offer us and withdraw from us:
1. On-premises Versions of Dynamics 365 Finance Can’t Access Direct Connection Anymore
The functionality for on-premises (locally installed) versions of Dynamics 365 Finance to directly submit Value Added Tax (VAT) returns to HMRC will no longer be available. The reason behind this discontinuation is security. The latest system is capable of storing and safeguarding credentials in a much better way and deploying an intermediary service.
2. The Changes Will Be Rolled Out at This Exact Timeline
- The first and foremost change will take place with version 10.0.43 of Dynamics 365 Finance, which will introduce new and more robust security features for cloud-based operators.
- In version 10.0.44, the latest security features will be implemented by default, and all environments (for cloud users) will automatically transition to this newly updated modus operandi.
- June 6, 2025, is the final date when support for VAT submissions through direct connection from on-premises deployments will be permanently stopped.
3. What is For You to Keep in Mind
If you are operating an on-premises version of Dynamics 365 Finance (this means the software is installed and hosted on your own servers), then you will no longer be licensed to optimize the direct connection to submit VAT returns to HMRC right after June 6, 2025.
If you already have your hands on the cloud-based version of Dynamics 365 Finance, then you just need to sit back and relax. The latest, more secure system will automatically start functioning for you.
What Should Be Your Plan of Action If You Manage Your Financial Operations on On-premises Versions of Dynamics 365 Finance?
We can understand that you are completely baffled by these latest security guidelines. Hence, we have created a simplified game plan for you. If you want to continue submitting VAT returns to HMRC seamlessly, you have two options:
Option 1: Migrate to the Cloud-based Solution
This is the recommended and preferable solution (it offers robust security, automatic updates, and effortless migration). If you choose to move your Dynamics 365 Finance to the cloud, you will be eligible to get automatic updates, enhanced security measures, and uninterrupted compliance with HMRC’s MTD requirements.
The cloud version is also capable of handling the VAT submission process in a smoother way, with the latest and airtight security policies already in place.
The cloud-based system will take care of the intermediary step which is necessary to connect securely to HMRC’s services.
Option 2: Go for Third-Party Software
If your preference is to continue utilizing on-premises setup for your financial operations, then you need to start searching for third-party software that can manage VAT returns to HMRC with uncompromising security features. The selected software must comply with HMRC’s compliance regulations and easily integrate with your on-premises Dynamics 365 Finance system.
However, this is an option, but it could be less inflexible and calls for extra maintenance as compared to moving to the cloud.
Concluding Statement
It would be an ideal move for you consider this update as a final reminder. Because, if you continue to operate using on-premises version of Dynamics 365 Finance and do not act before June 6, 2025, you will no longer be able to submit VAT returns to HMRC by using the existing process.
If you are still in a state of utter confusion. We would love to assist you with choosing the ideal solution for your business requirements. You can certainly explore our Azure Cloud Security Offerings which will enable you to uncover key insights about cloud security’s advanced and scalable security features.
