Making Tax Digital - changes to vat returns

guitars4you

Which businesses have signed up for MTD

Any issues or a pain 

I'm not just taking about FB members with a music orientated business - I'm asking any FB members with a vat registered business and what have you done about it so far - More useful if any info/help etc is from smaller oriented business like myself, with no or little admin and probably an annual  turnover between 100K and 500K

Currently all my stock is on an XL spread sheet on a PC - I've created my own system - All input is handled by myself on a manual basis as and when stock arrives and sales are made  - So when a guitar is sold I will input the price of the sale and another column automatically creates the level of vat due on that transaction - Take into account used guitars and the 'margin' scheme for vat 

Spread sheet info is as follows 

Guitar make/model    Cost      date sold        sale inc vat       vat      profit   

The above is applicable to all guitars in stock - For strings/accessories etc then all sales are accounted for manually on a daily/weekly/monthly basis - Vat is quickly accounted for as total sales divide by 1.2 - This figure is then manually added to the vat due on guitar sales

Each month I can then quickly create a total sales/profit/vat account - Then each 1/4 I create an appropriate set of figures - This is then manually fed into the HM Customs on line VAT return - Worked well for the last 15 years - Now I believe I need to change

Modulus_Amps

guitars4you said:

Which businesses have signed up for MTD

Any issues or a pain 

I'm not just taking about FB members with a music orientated business - I'm asking any FB members with a vat registered business and what have you done about it so far - More useful if any info/help etc is from smaller oriented business like myself, with no or little admin and probably an annual  turnover between 100K and 500K

Currently all my stock is on an XL spread sheet on a PC - I've created my own system - All input is handled by myself on a manual basis as and when stock arrives and sales are made  - So when a guitar is sold I will input the price of the sale and another column automatically creates the level of vat due on that transaction - Take into account used guitars and the 'margin' scheme for vat 

Spread sheet info is as follows 

Guitar make/model    Cost      date sold        sale inc vat       vat      profit   

The above is applicable to all guitars in stock - For strings/accessories etc then all sales are accounted for manually on a daily/weekly/monthly basis - Vat is quickly accounted for as total sales divide by 1.2 - This figure is then manually added to the vat due on guitar sales

Each month I can then quickly create a total sales/profit/vat account - Then each 1/4 I create an appropriate set of figures - This is then manually fed into the HM Customs on line VAT return - Worked well for the last 15 years - Now I believe I need to change

Not even looked at it yet, I have a pretty good system that works with Paypal at the moment ( they put the VAT aside for me so I don't have to worry about it until bill time) I do very little manual imputing and want it to stay that way... When does it come into full effect.... better go read up about it.

Fretwired

Signed up - our business software/accountant will handle it.

Snags

I think you're right, in that you'll have to change.

I have a nagging recollection, but I don't know where from so don't quote me, that there was talk of HMRC or A N Other developing an add-in for Excel that would handle it for people with modest needs who currently use Excel. But I remain to be convinced, and I'm not sure I'd want to trust it.

We use Quickbooks Pro 2016 (desktop, non-sub version). We've been using it (and the previous one we had, which I think was 2007) to file online for ages but I think the MTD stuff is different to the existing online filing, and I can't yet find any details from Intuit as to whether we're screwed or not. Obviously they want us to move onto their new subscription-based approach, but they can FRO unless I absolutely have to.

Just doing our year end, so will be picking it up with the accountants shortly, although before Christmas they were largely in the "it's happening, but there's no actual useful info yet" camp. Which is about right for government stuff.

guitars4you

Modulus_Amps said:

Not even looked at it yet, I have a pretty good system that works with Paypal at the moment ( they put the VAT aside for me so I don't have to worry about it until bill time) I do very little manual imputing and want it to stay that way... When does it come into full effect.... better go read up about it.

April 2019 - although from what I can gather, surprise surprise it is not yet ready - A bit like Brexit

Spoke to a customer who is an accountant and he said it is like getting married next week, but as yet we have no venue or a guest list

guitars4you

Snags said:

Just doing our year end, so will be picking it up with the accountants shortly, although before Christmas they were largely in the "it's happening, but there's no actual useful info yet" camp. Which is about right for government stuff.

that is what I'm picking up

gavin_axecaster

I've been in investigating the last few days. I won't have to start using it until my May return, so still have some time.

I use both software and spreadsheet for my VAT returns - I have Solar Accounts for my general accounting which can also provide VAT return reports but doesn't file them. Apparently the new online version will be MTD capable but I'm not "upgrading" to a £20+VAT a month software while the current one is perfectly useable. I also have a separate spreadsheet set up that I use as a double check against Solar, so I'm edging towards bridging software.

For your case I'd say look at bridging software - quite a few companies are offering it and it basically can use your spreadsheet - some have their own which you would need to switch to and some just have a page you have to add to your own spreadsheet and link/map the relevant boxes (of course there's also the actual filing API too)

Prices are from £20pa

Look on the Gov page for the software companies offering bridging software.

https://www.gov.uk/guidance/software-for-sending-income-tax-updates#VAT

Here's a few I've bookmarked for further investigation (yes, I've not got passed the As yet!).

https://www.andica.com/andica-mtd-vat-bridging-software.html

https://www.absoluteexcelvatfiler.co.uk/pages/absolute-excel-vat-filer

https://123sheets.co.uk/

https://www.123efiling.co.uk/pricing

https://1clickaccounts.com/pricing/

Philly_Q

It will apply to VAT periods commencing on or after 1 April 2019.  So unless you do a monthly VAT return, the first return affected will be the quarter ending 30 June 2019 - or 31 July or 31 August if those are your quarters.

Not everybody has to use software - if your taxable turnover is less than the current VAT registration threshold of £85,000, you can carry on using the current online system.  It's not exactly clear how they'll identify who can and who can't do this - I suspect there may be some "transitional arrangements" when we get to April.

Otherwise you will have to use some kind of compatible software like Xero or Sage.  There is talk of "bridging" software which will let you take figures from existing records on Excel - or even paper records I suppose - and use the bridging software just for the VAT return.  But I don't know the names of any branded bridging software, I'm afraid (but - EDIT - see Gavin's post above!)

guitars4you

^^^^^^^^^^^^^^^^  - Thanks @gavin_axecaster - This is the bit I don't like/understand - I'm not that tech literate and part of me either wants my accountant to say I'll do each return for you, on your behalf for x amount - Or B come and set it up and show me what to do - My shop pc is to old to probably accept many current forms of software so I don't want to spend hours trying to make something work that is not compatible and in the autumn of my career I don't want/need to invest in new updated pc etc etc

RedRabbit

guitars4you said:

Which businesses have signed up for MTD

Any issues or a pain 

I'm not just taking about FB members with a music orientated business - I'm asking any FB members with a vat registered business and what have you done about it so far - More useful if any info/help etc is from smaller oriented business like myself, with no or little admin and probably an annual  turnover between 100K and 500K

Currently all my stock is on an XL spread sheet on a PC - I've created my own system - All input is handled by myself on a manual basis as and when stock arrives and sales are made  - So when a guitar is sold I will input the price of the sale and another column automatically creates the level of vat due on that transaction - Take into account used guitars and the 'margin' scheme for vat 

Spread sheet info is as follows 

Guitar make/model    Cost      date sold        sale inc vat       vat      profit   

The above is applicable to all guitars in stock - For strings/accessories etc then all sales are accounted for manually on a daily/weekly/monthly basis - Vat is quickly accounted for as total sales divide by 1.2 - This figure is then manually added to the vat due on guitar sales

Each month I can then quickly create a total sales/profit/vat account - Then each 1/4 I create an appropriate set of figures - This is then manually fed into the HM Customs on line VAT return - Worked well for the last 15 years - Now I believe I need to change

If all you sales and purchases are already being recorded in excel then you may well be 90% of the way there already.

Very basically the requirement is that records are kept digitally and that there is a "digital link" between the records and the VAT calculation (i.e. the nine boxes that get filed).  As long as you are keeping sales and purchase day books which list the individual invoices then you should be fine.  The only thing I'd be aware of is that retailers are being required to keep daily records off taking.  It sounds like you are already recording guitar etc sales individually so that would leave accessories etc that you'd need to total up every day.

If you've got all this info on your quarterly spreadsheet all you need to do is have a page on the spreadsheet that calculates the values for the nine boxes of the return (as well as some other static info - VAT number etc).  If you need to make adjustments for margin schemes etc then this can be done as a single entry on the calculation (maybe have a separate tab on the excel for the calc and then link it back into the main VAT calc?)

The real complication comes from how this is submitted.  If you are using excel then you'll need to use "bridging software" to link into the VAT workings and then submit them to HMRC's new system.  I'm aware of software that is being made available to accountancy firms but not an awful lots out there for individual businesses yet.  As a short term solution we are offering to submit through our software so it might be worth asking your accountant if this is something they can do for you.

There are other options like moving onto an accounting package like Sage or Xero but, to be honest, if you are happy working with spreadsheets there isn't really a compelling reason to change.

I'm currently in the process of making sure all our clients are MTD compliant so if you have any questions just ask (or PM if more appropriate). 

RedRabbit

Snags said:

We use Quickbooks Pro 2016 (desktop, non-sub version). We've been using it (and the previous one we had, which I think was 2007) to file online for ages but I think the MTD stuff is different to the existing online filing, and I can't yet find any details from Intuit as to whether we're screwed or not. Obviously they want us to move onto their new subscription-based approach, but they can FRO unless I absolutely have to.

@Snags from what I've seen MTD is only going to be supported by QuickBooks Online.  If you are currently using the desktop version you will, most likely, have to change over.

Snags

@RedRabbit thanks for that. I shall be doing my best to find an alternative then, purely on principle. Drives me nuts being forced onto a subscription model for something which, fundamentally, is a one-shot product.

Bluebeard

If you have a business bank account with Natwest you can get a software called freeagent which is similar to xero for free.

Corvus

Handy reminder - my other half is also using Solar and we won't be forking for the subs version - same thing, don't want to be cornered. It only benefits the maker far as I can see, nothing much in it for the user except more costs.

Hoping the accountant will handle it but yes a good reminder, need to check...

guitars4you

RedRabbit said:

guitars4you said:

Which businesses have signed up for MTD

Any issues or a pain 

I'm not just taking about FB members with a music orientated business - I'm asking any FB members with a vat registered business and what have you done about it so far - More useful if any info/help etc is from smaller oriented business like myself, with no or little admin and probably an annual  turnover between 100K and 500K

Currently all my stock is on an XL spread sheet on a PC - I've created my own system - All input is handled by myself on a manual basis as and when stock arrives and sales are made  - So when a guitar is sold I will input the price of the sale and another column automatically creates the level of vat due on that transaction - Take into account used guitars and the 'margin' scheme for vat 

Spread sheet info is as follows 

Guitar make/model    Cost      date sold        sale inc vat       vat      profit   

The above is applicable to all guitars in stock - For strings/accessories etc then all sales are accounted for manually on a daily/weekly/monthly basis - Vat is quickly accounted for as total sales divide by 1.2 - This figure is then manually added to the vat due on guitar sales

Each month I can then quickly create a total sales/profit/vat account - Then each 1/4 I create an appropriate set of figures - This is then manually fed into the HM Customs on line VAT return - Worked well for the last 15 years - Now I believe I need to change

If all you sales and purchases are already being recorded in excel then you may well be 90% of the way there already.

Very basically the requirement is that records are kept digitally and that there is a "digital link" between the records and the VAT calculation (i.e. the nine boxes that get filed).  As long as you are keeping sales and purchase day books which list the individual invoices then you should be fine.  The only thing I'd be aware of is that retailers are being required to keep daily records off taking.  It sounds like you are already recording guitar etc sales individually so that would leave accessories etc that you'd need to total up every day.

If you've got all this info on your quarterly spreadsheet all you need to do is have a page on the spreadsheet that calculates the values for the nine boxes of the return (as well as some other static info - VAT number etc).  If you need to make adjustments for margin schemes etc then this can be done as a single entry on the calculation (maybe have a separate tab on the excel for the calc and then link it back into the main VAT calc?)

The real complication comes from how this is submitted.  If you are using excel then you'll need to use "bridging software" to link into the VAT workings and then submit them to HMRC's new system.  I'm aware of software that is being made available to accountancy firms but not an awful lots out there for individual businesses yet.  As a short term solution we are offering to submit through our software so it might be worth asking your accountant if this is something they can do for you.

There are other options like moving onto an accounting package like Sage or Xero but, to be honest, if you are happy working with spreadsheets there isn't really a compelling reason to change.

I'm currently in the process of making sure all our clients are MTD compliant so if you have any questions just ask (or PM if more appropriate). 

thanks for such a detailed reply - Will look further towards such a 'bridging software' and see how it can all be integrated 

Yes all daily sales (funds received) are recorded, be it misc or guitars - Ref misc then the funds received is the sales and vat adjusted accordingly - Ref guitars, then due to any part exchange transaction, plus the margin scheme, then the profit/vat has to be accounted for separately on an individual basis as against based on the amount of cash received

Thanks - Mark

RedRabbit

Sounds as though you are most of the way there then.

I've just had an email from a software provider about their bridging software - https://www.absoluteexcelvatfiler.co.uk/

I've not looked into it yet but at the very least it should give you an idea on how the process works etc.

Philly_Q

RedRabbit said:

I've just had an email from a software provider about their bridging software - https://www.absoluteexcelvatfiler.co.uk/

That's Tim Good and Giles Mooney!  We watch their programme Tax TV in work.

RedRabbit

Yeah, I've been on quite a few courses done by Tim and Giles.  Didn't realise that they did online courses as well.

Philly_Q

RedRabbit said:

Yeah, I've been on quite a few courses done by Tim and Giles.  Didn't realise that they did online courses as well.

Yeah, they do Tax TV every month.  It's like the Tonight Show with Jimmy Fallon, but (probably) more boring - Giles sits behind a desk and asks questions, Tim sits on a sofa and shares his wisdom.  Has to be said HD doesn't do them any favours...

There's also Accounting TV with Giles and Guy Loveday.  That's once a quarter.

gavin_axecaster

RedRabbit said:

Sounds as though you are most of the way there then.

I've just had an email from a software provider about their bridging software - https://www.absoluteexcelvatfiler.co.uk/

I've not looked into it yet but at the very least it should give you an idea on how the process works etc.

That's one I linked earlier. It's on my shortlist being a standalone system so you don't have to use a third party gateway.

RedRabbit

Philly_Q said:

RedRabbit said:

Yeah, I've been on quite a few courses done by Tim and Giles.  Didn't realise that they did online courses as well.

Yeah, they do Tax TV every month.  It's like the Tonight Show with Jimmy Fallon, but (probably) more boring - Giles sits behind a desk and asks questions, Tim sits on a sofa and shares his wisdom.  Has to be said HD doesn't do them any favours...

There's also Accounting TV with Giles and Guy Loveday.  That's once a quarter.

Do they try to fit in lots of jokes? I'm sure Giles really wants to be a comedian rather than a tax lecturer though I'm not sure the career change would be advisable.