Making Tax Digital - changes to vat returns

RedRabbit

gavin_axecaster said:

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.

Sorry, I hadn't seen that you'd linked to it as well.

From a chat with one of the partners in our firm it looks as though this is the bridging software we are going to be recommending to clients so I'm hoping it does the job .

Philly_Q

RedRabbit said:

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.

Giles is always quite jolly, but there aren't many jokes.  Tim isn't a great one for the bants.

CHrisP86

I’ve been to a few ‘live’ events with Tim Good and he’s actually quite witty and reasonably engaging (a tough thing to do in a talk about tax!) in person.

Bridging software, as mentioned, is a reasonable solution for most people now but arguably not the intended long term solution HMRC imagined.

Sorry if it’s already been mentioned already but other than filing VAT returns, MTD is also about a wider push for digital record keeping.

In theory, to be MTD compliant you should also at least be keeping your records on some sort of spreadsheet or other electronic format.

Whether HMRC can really monitor that is a different question.

Philly_Q

CHrisP86 said:

I’ve been to a few ‘live’ events with Tim Good and he’s actually quite witty and reasonably engaging (a tough thing to do in a talk about tax!) in person.

He was my Law tutor at BPP about 35 years ago when I was studying for ACA exams.

I didn't pass, but I don't hold him personally responsible.

RedRabbit

CHrisP86 said:

In theory, to be MTD compliant you should also at least be keeping your records on some sort of spreadsheet or other electronic format.

Whether HMRC can really monitor that is a different question.

Well, this is a point we've been over again and again.

What is being submitted to HMRC is the same nine figures as before. They don't get to see the back up figures or even if there was a digital link just from the submission. Last I heard, there are no plans to change this further down the line either (or at least for the foreseeable).

The only way they can check is by enquiring into a return and then they are actually quite limited in what they have access to. They don't have the right to access your digital records (i.e. they can't ask for login details for Xero etc or even to get the original excel files) all you have to provide them with is print outs of the data. Obviously this is easier to do if digital records are already being kept but, for the type of business likely to be keeping manual records, putting together an excel file after the fact wouldn't be that difficult as a "get out of the shit" move.

I suspect all this will change and they will be able to check digital links etc. at some point in the future and this will be retrospective.

Ultimately, as temping as it may be to fudge the system for those that can't be arsed with all this, I think we've got to assume that HMRC will be all over compliance checks after the 12 month soft launch period is over and they aren't stupid - they'll know who to target.

hywelg

Whilst I don't have to comply being well under the VAT threshold I can see this moving to be applied to all businesses, because the return for HMRC is real money. And less for them to do.

My problem will eventually be the software. I really object to a monthly rental, that's just being held hostage. I want a product I can manage locally, no cloud bollocks, and maybe pay an update fee for tax changes etc. 

gavin_axecaster

RedRabbit said:

CHrisP86 said:

In theory, to be MTD compliant you should also at least be keeping your records on some sort of spreadsheet or other electronic format.

Whether HMRC can really monitor that is a different question.

Well, this is a point we've been over again and again.

What is being submitted to HMRC is the same nine figures as before. They don't get to see the back up figures or even if there was a digital link just from the submission. Last I heard, there are no plans to change this further down the line either (or at least for the foreseeable).

The only way they can check is by enquiring into a return and then they are actually quite limited in what they have access to. They don't have the right to access your digital records (i.e. they can't ask for login details for Xero etc or even to get the original excel files) all you have to provide them with is print outs of the data. Obviously this is easier to do if digital records are already being kept but, for the type of business likely to be keeping manual records, putting together an excel file after the fact wouldn't be that difficult as a "get out of the shit" move.

I suspect all this will change and they will be able to check digital links etc. at some point in the future and this will be retrospective.

Ultimately, as temping as it may be to fudge the system for those that can't be arsed with all this, I think we've got to assume that HMRC will be all over compliance checks after the 12 month soft launch period is over and they aren't stupid - they'll know who to target.

I thought this was the whole point of bridging software? HMRC approved software fulfils the obligation by checking that the figures are worked out from a records, be-it spreadsheet or accounts package, and not just made up and manually filled in.

 After the soft launch all approved bridging software will be locked down so you cannot modify the submitted figures, they will have to be generated by "digital" means ie worked out/pulled over from your digital records.

Some of the bridging software being offered at the moment is obviously not going to be compliant after the soft rollout - you basically just fill in the 9 boxes and submit it via the API. Here's an example, coincidentally the cheapest, I suspect to get as many takers for the first year until it becomes obsolete.

https://1clickaccounts.com

joneve

We had a meeting with a VAT Consultant the other day...Much like Brexit, HMRC don't actually have a plan in place yet for Making Tax fully digital, and don't have the infrastructure for it yet. Shocker. 

It's a fucking pain in the arse for me, because some (popular) accounting packages (Xero for instance) insist on all purchases being recorded as VAT and Non-VAT because their software can't handle postings with variable VAT rates.

When your software deals with pubs (and pub managers) who record petty cash purchases (for various things, Xmas decs, straws, napkins, some food items, stationery, whatever), and often have receipts with a mix of VAT and non-VAT items - and thus the VAT value for the receipt isn't always 20% or 5%. 

As far as HMRC is concerned, this is perfectly acceptable, and we can (and do) produce exports which SHOULD import straight into Xero/Navision/Sun but Xero decided to make up their own rules and won't allow this. So now we're having to use a ridiculous amount of resources to try and accommodate this. 

RedRabbit

gavin_axecaster said:

RedRabbit said:

CHrisP86 said:

In theory, to be MTD compliant you should also at least be keeping your records on some sort of spreadsheet or other electronic format.

Whether HMRC can really monitor that is a different question.

Well, this is a point we've been over again and again.

What is being submitted to HMRC is the same nine figures as before. They don't get to see the back up figures or even if there was a digital link just from the submission. Last I heard, there are no plans to change this further down the line either (or at least for the foreseeable).

The only way they can check is by enquiring into a return and then they are actually quite limited in what they have access to. They don't have the right to access your digital records (i.e. they can't ask for login details for Xero etc or even to get the original excel files) all you have to provide them with is print outs of the data. Obviously this is easier to do if digital records are already being kept but, for the type of business likely to be keeping manual records, putting together an excel file after the fact wouldn't be that difficult as a "get out of the shit" move.

I suspect all this will change and they will be able to check digital links etc. at some point in the future and this will be retrospective.

Ultimately, as temping as it may be to fudge the system for those that can't be arsed with all this, I think we've got to assume that HMRC will be all over compliance checks after the 12 month soft launch period is over and they aren't stupid - they'll know who to target.

I thought this was the whole point of bridging software? HMRC approved software fulfils the obligation by checking that the figures are worked out from a records, be-it spreadsheet or accounts package, and not just made up and manually filled in.

 After the soft launch all approved bridging software will be locked down so you cannot modify the submitted figures, they will have to be generated by "digital" means ie worked out/pulled over from your digital records.

Some of the bridging software being offered at the moment is obviously not going to be compliant after the soft rollout - you basically just fill in the 9 boxes and submit it via the API. Here's an example, coincidentally the cheapest, I suspect to get as many takers for the first year until it becomes obsolete.

https://1clickaccounts.com

At the moment all the bridging software I've seen link into the 9 VAT return figures and submit those through HMRC's APIs.  This ensures a digital link between the submission and the 9 headline figures but there's no check that those figures come from other digital records.  Even if id did check for further links how would it check what was being linked to?  Maybe it checks that the 9 headline figures are generated through a formula?  Why not just have one tab with manually typed VAT return figures and another that grabs these figures and passes them to the bridging software.  Checking any deeper than that is starting wander into submitting more info the HMRC and they have specifically said that they won't be doing this.

Just to be clear, I'm by no means suggesting that anyone who should be filing under MTD should take these measures.  Loop holes only work for so long and, after the soft launch, I suspect none compliance will be met with hefty fines and HMRC will, no doubt, be all over it by then.

As @joneve alludes to, HMRC aren't actually really ready for all this but have stuck doggedly to the April roll out mainly, I think, because so many people said it wouldn't happen.  We are less than 2 months from the proper launch of the system and there are still questions HMRC don't have answers for - the main one for us is that exemptions may be granted but there are no guidelines yet so HMRC can't actually decide whether someone is exempt or not.  The only published info on this is to state that you may be exempt if MTD conflicts with your religious beliefs.

guitars4you

Some interesting points above - Yes I feel a similar issue in that the final results in the 9 boxes will be the same - Be they created on a bog roll, spread sheet or digital EPOS software program or similar - Yes data has to be recorded and be ready to be inspected if required - So I'm not sure what all the change is all about 

Take into account I have collected funds for them for over 40 years now - Never been paid for this service and never thanked - Now they want to devise some new format for submitting the same data

Nice to see others have picked up that HMRC are not ready as my accountants have expressed the same comments and have many other smaller businesses all asking the same questions

joneve

guitars4you said:

Some interesting points above - Yes I feel a similar issue in that the final results in the 9 boxes will be the same - Be they created on a bog roll, spread sheet or digital EPOS software program or similar - Yes data has to be recorded and be ready to be inspected if required - So I'm not sure what all the change is all about 

Take into account I have collected funds for them for over 40 years now - Never been paid for this service and never thanked - Now they want to devise some new format for submitting the same data

Nice to see others have picked up that HMRC are not ready as my accountants have expressed the same comments and have many other smaller businesses all asking the same questions

Our boss had a letter from a company she has a pension with today, stating that they're no longer submitting vat returns on your behalf going forward, because of MTD.

So you'll have to do it yourself. 

Seems a sensible option - just tell customers to go fuck themselves and do it yourself because we can't be arsed to comply. haha.

Strat_a_tat_tat

joneve said:

Our boss had a letter from a company she has a pension with today, stating that they're no longer submitting vat returns on your behalf going forward, because of MTD.

So you'll have to do it yourself. 

Seems a sensible option - just tell customers to go fuck themselves and do it yourself because we can't be arsed to comply. haha.

Not sure I understand. What impact does VAT have on a pension?

edbolivar

joneve said:

We had a meeting with a VAT Consultant the other day...Much like Brexit, HMRC don't actually have a plan in place yet for Making Tax fully digital, and don't have the infrastructure for it yet. Shocker. 

It's a fucking pain in the arse for me, because some (popular) accounting packages (Xero for instance) insist on all purchases being recorded as VAT and Non-VAT because their software can't handle postings with variable VAT rates.

When your software deals with pubs (and pub managers) who record petty cash purchases (for various things, Xmas decs, straws, napkins, some food items, stationery, whatever), and often have receipts with a mix of VAT and non-VAT items - and thus the VAT value for the receipt isn't always 20% or 5%. 

As far as HMRC is concerned, this is perfectly acceptable, and we can (and do) produce exports which SHOULD import straight into Xero/Navision/Sun but Xero decided to make up their own rules and won't allow this. So now we're having to use a ridiculous amount of resources to try and accommodate this. 

I do our VAT returns on xero and definitely add custom rates of VAT for items which have a mix of non vat and vat elements, you just creat a bill and choose from the drop down menu to create a new VAT rate

edbolivar

Personally I love Xero, I am not massively IT literate but I  got a bookkeeper to set it up and train me, now most entries reconcile automatically as it is linked to my bank accounts.
takes minutes each month and I can use it on my phone. 

joneve

edbolivar said:

joneve said:

We had a meeting with a VAT Consultant the other day...Much like Brexit, HMRC don't actually have a plan in place yet for Making Tax fully digital, and don't have the infrastructure for it yet. Shocker. 

It's a fucking pain in the arse for me, because some (popular) accounting packages (Xero for instance) insist on all purchases being recorded as VAT and Non-VAT because their software can't handle postings with variable VAT rates.

When your software deals with pubs (and pub managers) who record petty cash purchases (for various things, Xmas decs, straws, napkins, some food items, stationery, whatever), and often have receipts with a mix of VAT and non-VAT items - and thus the VAT value for the receipt isn't always 20% or 5%. 

As far as HMRC is concerned, this is perfectly acceptable, and we can (and do) produce exports which SHOULD import straight into Xero/Navision/Sun but Xero decided to make up their own rules and won't allow this. So now we're having to use a ridiculous amount of resources to try and accommodate this. 

I do our VAT returns on xero and definitely add custom rates of VAT for items which have a mix of non vat and vat elements, you just creat a bill and choose from the drop down menu to create a new VAT rate

Manual postings though I assume? It doesn’t work for integrated api data, that I can see from their developer docs

joneve

Strat_a_tat_tat said:

joneve said:

Our boss had a letter from a company she has a pension with today, stating that they're no longer submitting vat returns on your behalf going forward, because of MTD.

So you'll have to do it yourself. 

Seems a sensible option - just tell customers to go fuck themselves and do it yourself because we can't be arsed to comply. haha.

Not sure I understand. What impact does VAT have on a pension?

I believe they are a private firm that handles pensions among other investment and finance stuff. I’ll grab the name of the company tomorrow if I remember 

Jez6345789

We are submitting digitally started a few months ago through Zero. 

I am using Xero as the accountant likes it but if I was a slightly smaller business I would reach for quickbooks online I find it simpler and easier and it helps tidy all the other stuff up. Or if you just want what you have then look at those plugin mentioned above to do it in excel. 

rlw

Check the HMRC website for Absolute Software.   I think that I will use that for my clients requirements.

TimmyO

for those up on these things: I'm about to voluntarily register for VAT - I already use Xero - any downside to going the MTD route (rather than normal existing quarterly process) from the outset to save having to make changes in a year or so when its compulsory? 

Jalapeno

With all Gov software my advice is don't be an early adopter.  Be aware, be ready, but don't sign up early.