MTD vat help?

[flh801978]

I have my own small business in an engineering field..
I invoice between 3 and 8 clients a month ( same ones every month ) ..i enter the figures into a spreadsheet and every vat quarter i have 3 sheets to add together and enter into fields on the vat site
I generate the invoices by computer and print on preprinted invoices..
Purchases are the same on a spreadsheet.

Given i have to make tax digital from next return what software can anyone recommend to use for this?
I’d like to keep my invoice production as it is..

Ian

 

[Spectric]

You need to know what form of digital data that the VAT office will require. As for excel the CSV format is widely used, this is a coma separated format that is good for transfering data between platforms and where each line in the file is a single data record.

 

[akirk]

there are a number of options, but the simplest we found is TaxCalc - vat filer - however, they now seem to only sell it for accountants so it costs more... we were paying c. £20 p/a

there is a free excel plugin here: ANNA — business current account
this one is c. £20 p/a: VitalTax | MTD for VAT Excel Bridging Software

basically you want an excel friendly solution, so you can have your 9 figures in excel and then the software maps them...
technically it doesn't matter if you type them into Excel, as long as the software can bring them in from Excel it counts as digital them be the rules!

You have to use authorised software for it, you can't just output your data in a specific format (we were coders for MTD VAT, so that our internal project software we code could submit directly to HMRC, until we lost the will to live with the changes HMRC kept making!)

 

[flh801978]

Thanks for that akirk

 

[rwillett]

I only invoice four times a month, am a Ltd company, am VAT registered and have a lot of outgoings. It is a business that supports myself and family.

I tried to do this using an Excel spreadsheet (I am a 30 year+ developer and programming holds no fear for me), and tried to do it on the cheap. However the complexity of all of this, plus working out all the VAT submissions, plus presenting the accounts to the accountant to make good for end of year accounts, made me very quickly jump ship and move to a proper system. The stress of trying to keep up with HMRC and making it all work safely was too much and I just brought into Xero. Took some time to get right and some things like my initial VAT rate being reduced to 15.5% for startups were tricky, but my business bank account links directly to Xero, so all the outgoings are easily logged, I can drag and drop receipts straight in from my Mac and it just works.

My accountant has full access rights so they check it every so often. I also have the VAT done automaticaly (I pay around £8K per quarter) and payroll submissions are done monthly to HMRC.

We turn over circa £150K per annum and the costs of the subscription go against my tax anyway.

Is it cheap (£33/month), no, does it save me having sleepness nights, yes.

I would look carefully at what you want to do in your buisness and if you like tweeking spreadsheets, fine, otherwise pay for something thats up to date and does all the heavy lifting for you.

YMMV

Rob

 

[Sandyn]

When I had my business, I used Quick books from Intuit. It was very good. I see they now offer MTD for VAT, but looks like £8/month!!

 

[Matt_0222]

FreeAgent.com is another decent option - and easier to get your head round than Xero.

 

[akirk]

It is also worth noting that MTD for income / main accounts is coming very soon
those below the VAT threshold will have to report income / expense totals quarterly
those above will have to report against a number of categories - i.e. they will have to do mini accounts quarterly - and regardless of when your vat quarters might be, this will have to be annual calendar quarterly, so end of mar / jun / sep / dec

 

[Fidget]

My accountant recommended VitalTax, works for me and I hate doing accounts

 

[rwillett]

It is also worth noting that MTD for income / main accounts is coming very soon
those below the VAT threshold will have to report income / expense totals quarterly
those above will have to report against a number of categories - i.e. they will have to do mini accounts quarterly - and regardless of when your vat quarters might be, this will have to be annual calendar quarterly, so end of mar / jun / sep / dec

Thats not how I read the new MTD rules, though I will check with my accountant. We are above the VAT threshhold and submit VAT quarterly , we have always been in MTD and we do not appear to have any new hoops to jump through, e.g. we do not have do additional MTD quarters as well as VAT quarters.

here's the link to FreeAgent which is quite good

https://www.freeagent.com/guides/making-tax-digital/mtd-for-vat-q-and-a/
Also HMRC states here

Myths​

Under Making Tax Digital (MTD) for VAT, businesses will have to provide more information than they already do​

This is not correct: no business will need to provide information to HMRC more regularly than they do now, nor send any additional information.

HMRC Source (which should be definitive) - Making Tax Digital for VAT - mythbuster

That indicates to me that you do not have to submit more information beyond what you do nomally, assuming you do VAT quarterly. Also we are not submitting any more information than we do now. I'm struggling to understand why HMRC would want information outside of the VAT quarterly submission, if they need more information, they'd ask for it in the VAT submission.

I am not an accountant so take my research with a pinch of salt, and I am going to have a word with the accountant, but if there are additional reporting requirements for MTD, then I'd expect Xero to simply add that as needed and handle it automatically, but I'm not sure there is. I'd be interested in your source of information, specifically an HMRC link that states this.

Best wishes

Rob

 

[akirk]

There is MTD (Making Tax Digital) - VAT
Then coming soon to a painful process near you is MTD Income Tax
https://www.gov.uk/government/consu...requirements-regulations-2021-si-2021-no-1076To be fair - it is currently a consultation, but I am not sure I remember the last consultation which changed dramatically as a result of contributions - only published this month...

A relevant person with trading income must provide the following update information in each quarterly update:

• quarterly period start date
• quarterly period end date
• totals of the amounts falling within the categories of transactions set out in the following table:

Transactions that lead to business income	Transactions that lead to business expenses
Turnover	Cost of goods bought for resale or goods used
Other business income	Construction industry – payments to subcontractors
	Wages, salaries, and other staff costs
	Car, van, and travel expenses
	Rent, rates, power, and insurance costs
	Repairs and maintenance of property and equipment
	Phone, fax, stationery, and other office costs
	Advertising and business entertainment costs
	Interest on bank and other loans
	Bank, credit card and other financial charges
	Irrecoverable debts written off
	Accountancy, legal and other professional fees
	Depreciation and loss or profit on sale of assets
	Other business expenses

then more for those with property income...

the caveat on those below the VAT threshold is:
A relevant person with an annual turnover below the VAT registration threshold, as amended from time to time, may choose to provide the total of all income and the total of all expenses instead of the totals of the amounts falling within each category of transaction listed in this Update Notice.

I too would hope that the major software providers would be on the ball and be able to submit the data in a timely manner and in the required format, however the VAT exercise showed how many people decided that they would do the minimum to comply - so instead of moving internal systems into software such as quickbooks or xero, the old systems were left and summary data pushed through one of the simple solutions that just needed the figures in an Excel spreadsheet.


Details of the consultation (ending this month): Tertiary legislation for Making Tax Digital for Income Tax
it is coming and the current date is April 2024 - not long now!

 

[rwillett]

Just checked with the accountant and I was wrong, as is the HMRC guidance.

My accountants words are
--------------------------
MTD for companies does not come into play until at least 2026.

Essentially for MTD a business will submit its information quarterly such that, by its year end, in your case 31 January, it will have sent in 4 quarters of information which will essentially then make up your "accounts" for that accounting year.

If your VAT quarters do not align with your company year end then you will be making VAT submissions for VAT purposes and then MTD submissions for accounts purposes.

It is worth checking your VAT Quarters - if they are 31 January, 30 April, 31 July and 31 October then these will align with the MTD quarters for your company year end so only one submission per quarter will be required.

If they are different then you may wish to consider either changing the company year end or the VAT quarter date to line these two up together so that you effectively only make one submission each quarter
-------------------------
So the HMRC guidance that "No business will need to provide information to HMRC more regularly than they do now, nor send any additional information." is complete bollox. I know who I believe, my accountant or HMRC. Easy question.

As my VAT periods accidently coincide with the proposed MTD reporting periods so its little extra work for me, thats just luck though. Xero will update as appropriate so I'm not too concerned about the extra work, but clearly HMRC guidance is not to be trusted. I supposed you could argue that everyone will change their VAT submission to match their MTD submission to make it easy but thats still work.

I know know better

Thanks
[Edited for spelling mistakes]
Rob

 

[Ollie78]

I use quickbooks, but not vat registered so using the cheapest one. Dead easy to use.
You can upgrade to what you actually need.

Even though the MTD is not a thing yet, I find using a system like this makes me actually do better accounting, take pictures of my receipts straight away in the van, it matches to my bank statement. I make notes of what stuff is as I go along.

Much less stressful than my previous method of panicking because I forgot to do it, then covering the house with receipts and trying to organise my chaos once a year.

I just ask my accountant to check it
( I always mess something up )and file my return each year.

Worth it.

Ollie

 

[akirk]

Just checked with the accountant and I was wrong, as is the HMRC guidance.

My accountants words are
--------------------------
MTD for companies does not come into play until at least 2026.

Not sure where he is getting 2026 from if the government website is currently reporting 2024...

 

[RhysN]

My wife who is a management accountant, and worked with some people in similar situations recommends Free Agent. You will find a link on the HMRC site relating to which software HMRC recognize. She says it's very to use, links to spreadsheet etc.

 

[J-G]

I've only briefly scanned this thread but do get the 'jist'.

I am VAT registered (even though my turnover is now well below the threashold) and have written my own accounting software - therefore always been 'Digital' but not in the sence that it would automatically link to the HMRC site for submissions. The insistance that I MTD in their terms did make me think about de-registering but after a little research, I found 100PC [Link] which is what HMRC call a 'VAT Bridge' and is (would you believe) 100% FREE. It simply takes the data from an Excel compliant CSV file - which I output from my accounting suite - and sends it to the HMRC site. Naturally you have to 'register' your VAT Details at first use which links your VAT Registration Number, Company Name etc. to your account with HMRC but it's a very simple 'Once Only' process.

Once I'm ready to submit my Return, I simply tell 100PC which cells in the CSV file contain the data for the current VAT Quarter and I get a response that the Return has been received - within seconds usually but depending upon the date -- if it's the last date due and the site is 'busy' then it has taken up to a minute or two. I could make my accounts output only the specified quarter CSV file (which would make the cells always the same) but I already have a routine that creates the CSV file of VAT Data so see little benefit from doing so.

I've no idea where the odd dates of 'by 2026 or 2024' come from - as far as I'm aware it is mandatory from the first period that includes Period 04-22 - ie. April this year - I've been using it since my period 12-21.

I did get somewhat confused though at my last return date since although I had previously used the 'Bridge' I hadn't actually registered to use MTD - that is a separate process !! More 'Red Tape'!

 

[akirk]

MTD for VAT is already in place we have been doing it for several years…

2024 and 2026 are referenced above in a side discussion about when Income tax will join MTD