Making Tax Digital

[Simon Lewis]

Anyone gearing up to meet HMRC's new mandatory requirement to file VAT online directly from a compatible software package?

 

If so, what approach are you taking? If not, sorry if this comes as a surprise!

 

HMRC 'making tax digital'

[timsabre]

Yes unfortunately. What a waste of everyone's time. I will be using one of the excel "bridging software" solutions where you have your vat100 figures in a spreadsheet, the bridging software submits it to hmrc for you.

 

Basically just like it was before except you have to paste your figures into the spreadsheet rather than typing them ob on the hmrc website.

 

123efiling.co.uk is looking like a good option at the moment, currently free for 4 vat returns per year.

[Stuart91]

We're using Xero for online bookkeeping, so it's not much of an issue as we submit VAT returns much as before, via their software. However I appreciate it'll be a major PITA for folks who use spreadsheets or their own bespoke solutions.

[timsabre]

We are using a desktop version of quickbooks, but I don't particularly want to have to buy the latest version to get this facility, so the bridging software is looking best for us.

 

I suspect hmrc will only allow this for a transitional period though.

[Junior8]

For those looking for 'bridging software' HMRC have said they will allow cut and paste until the end of Tax Year 2019 -2020 which gives a bit of breathing space. I do know of several firms changing accounting packages due to the arm and lag being charged for updates to their existing systems.

 

This all has its roots in G Osborne's 2015 Budget when it started out as Making Tax Simple.

[Brian]

Remember...

 

1) It only applies if you turn over more than £85k

 

2) My accountant recently wrote...

 

Finally, although I am writing as though this is sure to happen, I am not convinced that HMRC will not defer it at the last minute. That is one reason that I am not recommending the so-called pilot programme. Everyone has enough to do without playing guinea pig.

[timsabre]

How will they know you have used cut and paste though?

 

I have had a letter from HMRC saying that I must register and can no longer use the HMRC website for my next vat return.

[Junior8]

Remember...

 

1) It only applies if you turn over more than £85k

 

2) My accountant recently wrote...

 

Finally, although I am writing as though this is sure to happen, I am not convinced that HMRC will not defer it at the last minute. That is one reason that I am not recommending the so-called pilot programme. Everyone has enough to do without playing guinea pig.

 

This is not a pilot - that ends in April. The continuing pilot is the similar mechanism for filing tax returns.Link

 

In the next tax year if you are VAT registered and your t/o is over £85K you must use MTD with a limited number of exceptions. VAT registered businesses below £85K can take part voluntarily.

 

[Caerdydd]

I'd second Xero as a solution, when it's up and running it's a fantastic resource.

[abbotsmike]

I'm admittedly quite new to the game, but I've just been using xero since day one. The small fee is easily worth it for the convenience of reporting and being able to just hand a login to an accountant for end of year/checking.

[paulears]

I've been doing things as a result of this, but HMRC have softened their language in the past few days.

 

 

I get their media posts due to a ######-up their end, and get embargoed stuff they send to the broadcasters. Looking back to about October last year, they have changed critical works. "should" is now "could", "will" is "might" and other similar changes. The other thing was that the exceptions from the system were tiny - yet now in the blurb below it's clear they appreciate that some people cannot comply - often for internet reasons. A friend on a farm in the Yorkshire Dales - their internet is non-existent so on-line anything rarely works before you get the connection dropped. Now, there's a bit more leeway.

 

Don't forget the rules on the VAT registration are based on rolling periods, so you may well have managed to keep below the 85K turnover based on April to April - but exceeded it in a different period. Those with voluntary VAT registration were being told that once in, you're in - so de-registration the only solution. However - there is some scope for the spreadsheet translation software, but early reports indicate that it needs people to really understand spreadsheet formulas and you have to point the software to the right fields for reporting and this is your call - if you make a small slip in the spreadsheet, the reporting will be wrong, so it needs more care.

 

I went for the Freeagent solution withe the receipt scanning. It costs per month but my accountancy bill will reduce by roughly the same amount so status quo there. However, so far I am very impressed and sold on the system as it's uncovered payments going out unknown to me. It analyses the ins and outs from the bank and compares these to receipts and invoices and matches them up - which you review and agree. It found a direct debit with no matching receipts/invoices and BT were taking £100+ each month from my account on top of the correct payments, and I'd not noticed - Freeagent did! Sorted with BT, but how long would it have gone on?

 

Some other MTD oddities are that plenty of people do not know about it, not having had any post from HMRC about it. For those over the threshold, they cite April, but this appears to be the first quarter where a digital reporting is needed at the end. Those who didn't know won't know till July that they should have been using a new system since April, so even if they invest in a new software solution, backdating it won't be simple.

 

Here's the HMRC latest release - it's very long winded, so stop reading here if you don't wish to fall asleep. The important sentence is at the end - who doesn't need to do it.

 

Afternoon,

 

Today HMRC is inviting businesses across the East of England to ditch paper receipts and sign up for Making Tax Digital instead.

 

Press release is attached and pasted below.

 

A clip of Mel Stride, Financial Secretary to the Treasury, discussing Making Tax Digital can be found here:

We also often have local radio broadcasters available for interview.

 

Any questions, please get in touch.

 

All the best,

Jemma

 

 

Jemma Smith | Regional Press Officer - East of England & Essex | Press Office | HMRC Communications | Tel: 03000 520 184 | Mobile: 07741 615 662

Follow HMRC Press Office on Twitter at: @HMRCpressoffice

Ditch paper receipts – as VAT goes digital

 

Senior decision makers at businesses in the East of England are some of the least likely in the country to lose important documents, like receipts (55%), according to new figures released today.

 

The poll, run by YouGov for HM Revenue and Customs (HMRC), also found some of the highest levels of support for having all tax accounts digitalised, with 68 per cent saying they supported it.

 

HMRC is now inviting businesses across the East of England to ditch paper receipts and sign up for Making Tax Digital instead.

 

Most businesses above the VAT threshold will need to keep their records digitally and submit their VAT return using compatible software when MTD is introduced for periods starting on or after 1 April 2019.

 

In practice, the vast majority of businesses won’t need to send their first MTD return until August at the earliest, but if they aren’t already keeping their records digitally they will need to start doing so. HMRC are encouraging more businesses to get involved early by getting software and starting to test the service now.

 

Mel Stride, Financial Secretary to the Treasury, said:

 

“Anything that helps businesses to manage their tax more easily so they can focus on what they do best - innovating, expanding, and creating jobs and profits - is what every modern business needs.

 

“In a world where customers and suppliers are already banking, paying bills and shopping online, it makes sense for HMRC and businesses to bring tax affairs fully into the 21st century.

 

“Going digital with business records and taxes is the next step to businesses getting more control over their business and their finances.”

 

Theresa Middleton, Director of the Making Tax Digital for Business Programme, said:

 

“There is no change to ‘what’ information is provided through MTD, just ‘how’ it is recorded, generated and provided. We want to help businesses be ready for the changes which kick in for VAT periods which start on or after 1 April.

 

“We’ll have written to every business required to join this year by the end of February, but even back in December over 80% of them were aware of the changes they need to make and the vast majority of those are already preparing.

 

“More than 16,500 businesses have already signed up to do their VAT digitally – why don’t you join them?”

 

Richard Balson of R J Balson & Son Butchers based in Bridport, Dorset, said:

 

“As the oldest family butchers in Britain we have moved with the times since 1515, balancing the traditional with the modern. MTD is an example of that progression and we are happy to be digitising our records to make the switch to digital as part of the MTD Pilot.”

 

For most businesses their accountant or other tax representative will already be aware and will advise them how and when they need to make changes to be ready for the new service. Those already using software will simply need to ensure it is MTD compatible before joining the new service.

 

For those who are not using an accountant though, it is quick and easy to sign-up and there is lots of information available to help them prepare, including about what software is available.

 

What businesses need to do?

 

· Take steps to find out if your business is affected by the Making Tax Digital changes and what you need to do if it is. Most businesses above the VAT threshold have to start keeping their records digitally and sending their VAT return to HMRC direct from their software for VAT periods starting on or after 1 April.

 

Talk to your accountant or other agent – if you use one to manage your VAT affairs - about how they are making returns Making Tax Digital compliant.

 

Speak to your software provider if you already use software to ensure it will be compatible.

 

Those businesses who are either not represented by an accountant and/or do not already use software will need to select software to use and sign-up to MTD. Our GOV.UK webpages provide information on a wide variety of products, from free software for businesses with more straightforward tax affairs, to increasingly sophisticated paid solutions. There are also products that can be used in conjunction with a spreadsheet for those businesses who don’t want to change their underlying record keeping system.

 

Mel Stride, Financial Secretary to the Treasury, speaks about MTD here:

 

Easy to use guides for businesses, agents and others including easy-to-follow advice are available here:

https://www.gov.uk/guidance/use-software-to-submit-your-vat-returns

 

Webinars and videos for Making Tax Digital are available: https://www.gov.uk/government/publications/making-tax-digital-for-business-stakeholder-communications-pack/making-tax-digital-for-business-stakeholder-communications-pack#additional-support-and-guidance

 

MTD is part of the government’s #Smartergov campaign which was launched to drive innovation through the public sector.

 

Notes for editors

All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 1,042 adults. Fieldwork was undertaken from 28th January - 5th February 2019. The survey was carried out online. The figures have been weighted and are representative of British business size.

Research carried out by HMRC in December identified that 8 in 10 of the businesses required to join were aware of MTD, and over 80% of them had already started to make preparations.

HMRC recognises that businesses will require time to become familiar with the new requirements of MTD. HMRC has been clear that during the first year of mandation, they will take a light touch approach to digital record keeping and filing penalties where businesses are doing their best to comply with the law. But this does not mean a blanket ‘no penalties promise’.

No business will be forced to go digital for their VAT returns if they are unable to. Anyone who is already exempt from online filing of VAT will remain so under MTD and there is further provision for those who cannot adapt to the new service due to age, disability, location or religion to apply for an exemption.

Those businesses that are registered for VAT but are below the VAT threshold are also not required to use the MTD service, but can choose to do so.

6. Follow HMRC’s Press Office on Twitter @HMRCpressoffice

 

Issued by HM Revenue & Customs Press Office

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Jemma Smith

Tel: 03000 520 184 or 07741 615 662

Email: jemma.smith@hmrc.gov.uk

 

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[TonyMitchell]

How will they know you have used cut and paste though?

 

This video seems to explain simply what is and isn't acceptable in terms of Excel submissions.

After watching it, as an exercise, I exported our last Sage VAT return to a two tab excel file (detail and summary) and replaced the text output with formula, then replaced the box 1-9 text output on the 'summary' tab with calculations pulling the respective values in from the 'detail' tab. I added a check formula for boxes 1-9 to confirm 0 variance between my formula and the initial Sage data. It took about 10 minutes to make an MTD compliant Excel file.

Sage (and others) want to use MTD to force people onto their 'pay monthly' cloud based software. Reality is for us and probably most small businesses, this will just add cost and no benefit, which is why we won't be going there!

[timsabre]

But how would you plan to submit the excel file to hmrc?

[paulears]

In that example - you use their software, which allows you to submit the .csv file to HMRC. This is the trouble. The software assumes a level of user spreadsheet competence. It does seem that the simplest version is just to have a small series of boxes, as the old online system had, and you type into a spreadsheet the figures, upload the file to the online submission app you have sourced, and if the spreadsheet format is correct it goes across seamlessly.

 

The kind of people who are worried by MTD are, in the main from what I read, people to whom computers are an issue - so bridging software will be tricky too.

 

Personally I was very sceptical and somewhat cross, but I now really like the new system I'm using and do not want to go back - I like it.

 

However - HMRC are having a few issues. I volunteered for starting early but it has messed up the collection system. HMRC told me they had collected the Sept-December VAT as usual on a date in early Feb. I knew they hadn't;t having checked my account a few minutes previously. They were very confused as online, and on their system, I owed nothing at all. I held on while they got in touch with the MTD department who confirmed that they hadn't actually got the payment at all, and would I mind transferring it to their account manually. I wonder how many other firms have noticed? Big ones probably missed it, while small ones like me got to notice because my new software kept prompting me to approve a transaction against the bank account. I'd entered the VAT payment in the 'VAT payment' section of the new software but it noticed no corresponding sum going out of the bank. Going to be interesting in April.

[TonyMitchell]

But how would you plan to submit the excel file to hmrc?

 

I understand you 'drag' it onto their upload area