Digital Tax Ready?

[MRDBLUE17]

I retired as an accountant in public practice about 3 years ago, so my knowledge is not as complete as if I were still in practice. I was under the impression from what I have read, that the use of spreadsheet accounting was still possible provided the data can be filed directly with HMRC systems. I used to use a similar method to file iXBRL company accounts. using VT accounting software which was an Excel add-in. I have just visited their website and it seems they intend to provide a "bridging product" to enable the filing of returns via an Excel add-in. It may be worthwhile for those interested if they visit the MTD page on their website and/or have a word with the software house. My only connection was as a satisfied customer. www.vtsoftware.co.uk/mtd/index.htm

 

Hope this helps.

 

Colin

Thanks Colin,

 

Very helpful.

 

So far I’ve found it to be a really good package to use for my business and my accountant said they were working on the right solution so hopefully will be reasonably straight forward.

 

Cheers

Mark

[How about a Dictator Loco Class?]

So what about those bellow the £85,000+ earnings mark. Will normal self employed people need this new software?

And what does that actually cost? £££ (For software that's for 1 person rather than a bigger company)

[johndon]

So what about those bellow the £85,000+ earnings mark. Will normal self employed people need this new software?

And what does that actually cost? £££ (For software that's for 1 person rather than a bigger company)

 

At the minute anyone/company that is either not VAT Registered or is VAT Registered but under the threshold needs to do nothing you can continue to submit VAT Returns in exactly the same was as you do today.

 

As I understand it, anyone VAT Registered but under the threshold will fall under MTD from April 2020.

 

As for how much the software costs, how long is a piece of string.  There are some companies offering free 'bridging' software that will take the relevant data from a spreadsheet and submit it to HMRC and there are all the companies offering accountancy software who have added it as a feature, some at no extra cost and other at additional, monthly subscription costs.

 

John

[john new]

So what about those bellow the £85,000+ earnings mark. Will normal self employed people need this new software?

And what does that actually cost? £££ (For software that's for 1 person rather than a bigger company)

Hopefully not too far off topic, for very small traders, and individuals with relatively small volumes of income, the new £1000 exemption is a big help with filling in the tax return, although obviously you need to keep the records to prove your gross income was below £1k. Not everything HMRC does is unhelpful, other changes too also made this year's return easier to fill in.

Edited January 28, 2019 by john new

[The Lurker]

On ‎1‎/‎15‎/‎2019 at 11:32 PM, antrobuscp said:

I retired as an accountant in public practice about 3 years ago, so my knowledge is not as complete as if I were still in practice. I was under the impression from what I have read, that the use of spreadsheet accounting was still possible provided the data can be filed directly with HMRC systems. I used to use a similar method to file iXBRL company accounts. using VT accounting software which was an Excel add-in. I have just visited their website and it seems they intend to provide a "bridging product" to enable the filing of returns via an Excel add-in. It may be worthwhile for those interested if they visit the MTD page on their website and/or have a word with the software house. My only connection was as a satisfied customer. www.vtsoftware.co.uk/mtd/index.htm

 

Hope this helps.

 

Colin 

Yes you are quite right. I work for a group of companies and we are looking at purchasing bridging software (and some of this will be available for free). HMRC guidance seems to be summed up as yes you can use Excel but don't use "cut and paste" to transfer numbers around, because apparently that's not digital. Typing numbers into a spreadsheet, on the other hand, is OK.

[2mmMark]

20 hours ago, The Lurker said:

Yes you are quite right. I work for a group of companies and we are looking at purchasing bridging software (and some of this will be available for free). HMRC guidance seems to be summed up as yes you can use Excel but don't use "cut and paste" to transfer numbers around, because apparently that's not digital. Typing numbers into a spreadsheet, on the other hand, is OK.

Ah yes, the old analogue "cut 'n' paste".  I remember it well.  A nice sound quality, especially on valve computers.

I don't know if it's the same for business but in my dealings with HMRC for my personal tax a while back, I used the non-geographical number intended for overseas residents by withholding my UK phone number. It seemed to bypass the long hold queues on the 0345 numbers. I was pleasantly surprised to find the process could be dealt with entirely by phone there and then.

Maybe HMRC are only allowed a set amount of difficulty per annum and are now applying that to businesses?

[antrobuscp]

Making Tax Digital (MTD) has been on HMRC's agenda for some time - well before I retired about 3 years ago. Initially, the plan seemed to be that all businesses including property rentals were to be included apart from some with a very small turnover - something in the order of £10/15k pa. The returns that were to be required were not just VAT but what amounted to quarterly accounts, with an annual adjustment at the end (31st January following, I believe). HMRC tried to "sell" this as a simplification when, in fact, it looked like filing 4/5 tax returns per year and one has to suspect that it would help with the roll-out of Universal Credit for the self-employed. HMRC has seemed to back off this after much criticism, not least of a much too tight timescale which would have seen the new regime coming into effect this or next year. I wouldn't be surprised if this is just a postponement, not a change of direction. Be aware and speak to your accountants once this first stage is in effect and bedded in. I fear more will follow.

 

Colin

[Widnes Model Centre]

Hi Colin,

 

What is surprising is that we have never received any notification from HMRC re MTD. It is only what I have picked up in emails, webinars etc from the FSB.

 

Having made initial enquiries. The very least we will be need to spend to comply with MTD is looking at around £150 per annum. That is not taking into account any and I sure it will be many; "Man Hours" to complete the data to meet the requirements of HMRC.

 

The suggestion is that HMRC have brought this in to cut down on the mistakes made when completing VAT returns. Surely if they spot the mistakes they are rectified on the next return?

 

Once again in my opinion, HMRC are making those who do pay VAT, Income Tax etc, instead of going after those businesses who fly under the radar. Only this week I was told of one business who refuse to take Card Payments and will only take cash. I am told they do have a card machine but never use it. Why?

48 minutes ago, antrobuscp said:

Making Tax Digital (MTD) has been on HMRC's agenda for some time - well before I retired about 3 years ago. Initially, the plan seemed to be that all businesses including property rentals were to be included apart from some with a very small turnover - something in the order of £10/15k pa. The returns that were to be required were not just VAT but what amounted to quarterly accounts, with an annual adjustment at the end (31st January following, I believe). HMRC tried to "sell" this as a simplification when, in fact, it looked like filing 4/5 tax returns per year and one has to suspect that it would help with the roll-out of Universal Credit for the self-employed. HMRC has seemed to back off this after much criticism, not least of a much too tight timescale which would have seen the new regime coming into effect this or next year. I wouldn't be surprised if this is just a postponement, not a change of direction. Be aware and speak to your accountants once this first stage is in effect and bedded in. I fear more will follow.

 

Colin

 

[Claude_Dreyfus]

If anyone has a Natwest business account, then they are offering FreeAgent, free of charge (which sounds a bit of an oxymoron given the software's name!). FreeAgent has also been recommended by at least one other colleague of mine.

 

I have also been recommended Quickfile. The software itself is free, but you need to pay £15.00 (+VAT) p/a for the bank link.

 

If you bank with HSBC, don't even bother asking their business adviser about it - they didn't even know about MTD!

 

[antrobuscp]

1 hour ago, Widnes Model Centre said:

Hi Colin,

 

What is surprising is that we have never received any notification from HMRC re MTD. It is only what I have picked up in emails, webinars etc from the FSB.

 

Having made initial enquiries. The very least we will be need to spend to comply with MTD is looking at around £150 per annum. That is not taking into account any and I sure it will be many; "Man Hours" to complete the data to meet the requirements of HMRC.

 

The suggestion is that HMRC have brought this in to cut down on the mistakes made when completing VAT returns. Surely if they spot the mistakes they are rectified on the next return?

 

Once again in my opinion, HMRC are making those who do pay VAT, Income Tax etc, instead of going after those businesses who fly under the radar. Only this week I was told of one business who refuse to take Card Payments and will only take cash. I am told they do have a card machine but never use it. Why?

 

Having retired, I don't know precisely how HMRC have communicated the changes. I do know that I have received numerous emails from HMRC, and my professional body(ICAEW), on the subject - I have still kept up all the email subs to newsletters, etc., that I used to get. I should say that I generally dealt with small businesses. Accountants in current practice should, in my opinion, for some time have been in touch with their clients. I know I would have been. The eradication of error argument is, to me, false, as forcing people to use systems which they may not fully understand may well generate more errors. Errors are not necessarily self-correcting as it depends on the nature of the error and when it is spotted - but figures translating across automatically does not necessarily assist in spotting an error - quite the opposite in many cases, as the assumption often is that "the computer is right".

 

I remember being on a course when a comment attributed, I believe, to Tony Blair, suggested that business records would be more reliable if a particular software program was used. The room was full of accountants who burst out laughing at the thought. Many people in business do not have the time to learn, understand, and operate software systems, leave aside the cost. Time has moved on since that course, software has improved, and more people are computer literate but someone wanting to keep their records on a software package needs to a) understand the software and how to use it and b) have at least some knowledge of bookkeeping/accountancy principles, or they have to employ someone who has. Either way there are time or financial constraints.

 

Colin

[Widnes Model Centre]

7 hours ago, antrobuscp said:

Having retired, I don't know precisely how HMRC have communicated the changes. I do know that I have received numerous emails from HMRC, and my professional body(ICAEW), on the subject - I have still kept up all the email subs to newsletters, etc., that I used to get. I should say that I generally dealt with small businesses. Accountants in current practice should, in my opinion, for some time have been in touch with their clients. I know I would have been. The eradication of error argument is, to me, false, as forcing people to use systems which they may not fully understand may well generate more errors. Errors are not necessarily self-correcting as it depends on the nature of the error and when it is spotted - but figures translating across automatically does not necessarily assist in spotting an error - quite the opposite in many cases, as the assumption often is that "the computer is right".

 

I remember being on a course when a comment attributed, I believe, to Tony Blair, suggested that business records would be more reliable if a particular software program was used. The room was full of accountants who burst out laughing at the thought. Many people in business do not have the time to learn, understand, and operate software systems, leave aside the cost. Time has moved on since that course, software has improved, and more people are computer literate but someone wanting to keep their records on a software package needs to a) understand the software and how to use it and b) have at least some knowledge of bookkeeping/accountancy principles, or they have to employ someone who has. Either way there are time or financial constraints.

 

Colin

 

Hi Colin,

 

Agree with everything you have said above. I should point out that my Accountant has been speaking to us and is coming to visit this month.

 

No communication however from HMRC. We have had three letters sent to us on how to prepare ourselves for a "No Deal Brexit". We import direct from Germany and will need to literally jump through hoops to enable us to continue with importing direct. Import Licence, Haulier Licence, inform HMRC as to what we intend to do etc, etc. So they are preparing us for something that might occur, but not something that is happening and soon.

 

Some years ago we were VAT inspected and the Inspector took absolutely everything away, including to my surprise the serial number off our cash register in the shop. I was interviewed for over two hours and then was instructed to get my Accountant to the shop. The cost of all that was to say the least a major surprise. The following morning, the Inspector contacted me. Everything was in order and she made a comment that she had never seen a simpler form of book keeping ever. It had made her job very easy. The fact she left us with all our books etc and was replying so quickly bore that out.

 

MTD will throw my bookeeping into the past. I consider myself "computer literate", but this will test my skills beyond what I have ever had to do in the past. That will cost. Increasing the chance of me making an error? Certainly will!

 

Our December 2017 VAT was relayed to me by as I am sure is the practice in many Accountancy firms by an office worker, was in my belief a £1000 overpaid. I asked for one of the accountants to call me back and he agreed with me. Having used a computer it was £984 overpaid. It had already been submitted to HMRC. I don't know if they actually picked it up but it was corrected three months later with correct figures submitted. I left that firm of accountants after they sent me an invoice complete with explanation of how much time had to be put in to correct their error!! They never requested the payment again. How did I know the figure was wrong? Mental arythmetic. Not a computer.

 

Regards

Barry

P.S Antrobuscp? Every time I see your name it reminds me of Antrobus Farm near Warrington where we used to go grasstrack racing in the 1970's, any connection?

[antrobuscp]

Barry,

 

Communication by HMRC has always been patchy, and often late in relation to the issue at hand. Changes to accounting systems can take a long time to implement. When MTD was first suggested and included simple quarterly accounts, I had one or two clients who would struggle to comply if given 5 years to achieve the change - in one case due to the sheer complexity of the business. There were software packages which could do the job but their existing systems were part manual and part spreadsheet based and the operation would have to have undergone substantial re-thinking to achieve a totally software based solution.

 

The Brexit communications are, no doubt, the result of instruction from a "higher authority".

 

Your VAT visit does not seem to have been particularly "heavy", and a 2 hr meeting not unusual if the officer is trying to gain an understanding of your business and what might be included therein. The accountant could often be drawn in and we often suggested that the meeting be at our office, but that meant making sure all the records necessary were physically present.

 

You have my sympathy regarding your accounting system, but software and connected solutions are deemed to be the way forward. Errors do occasionally happen in the best of circumstances, and I would decide what to do or charge depending upon the cause - the least I would do would be to find out what had happened and explain it to my client. I/we used to use spreadsheets to support VAT return submissions and these included self checks which often highlighted simple errors of entry because expected ratios were "out". 

 

As to the name, no, no connection but the name appears to come from a Cheshire village called Antrobus - which goes back to Norman times. Apparently a corruption of a French phrase "Entre Bois" which was meant to describe the then location between woods. 

 

Colin

[chris p bacon]

I'm no further forward on finding a suitable package, as most are way too complicated for my needs.

 

As an example last accounting year had just 79 line entries on an excel spreadsheet for material purchase with no invoices (ever) issued. Turnover is 6 figure sum and the company is registered for zero rated work (new build) so I only ever claim back.

 

I'll probably end up with Sage at a tenner a month, not a huge cost but more of an annoyance.

[antrobuscp]

57 minutes ago, chris p bacon said:

I'm no further forward on finding a suitable package, as most are way too complicated for my needs.

 

As an example last accounting year had just 79 line entries on an excel spreadsheet for material purchase with no invoices (ever) issued. Turnover is 6 figure sum and the company is registered for zero rated work (new build) so I only ever claim back.

 

I'll probably end up with Sage at a tenner a month, not a huge cost but more of an annoyance.

If you are using Excel, I would have thought that one or two of the "linking products" may enable you to keep your current system. I mentioned one up the thread, but I understand there are others. Sage may well be "overkill" and, depending upon your past knowledge, require quite an initial learning curve.

 

I would look firstly at the linking products before jumping into a package solution. 

 

Colin

 

 

[antrobuscp]

3 hours ago, Widnes Model Centre said:

 

No communication however from HMRC. We have had three letters sent to us on how to prepare ourselves for a "No Deal Brexit". We import direct from Germany and will need to literally jump through hoops to enable us to continue with importing direct. Import Licence, Haulier Licence, inform HMRC as to what we intend to do etc, etc. So they are preparing us for something that might occur, but not something that is happening and soon.

 

 

 

I received a newsletter this morning which suggested that very few traders had received any communication from HMRC. One response suggested that HMRC had decided not to do a mailing as it would be "widely publicised" in the media.

 

Colin

[antrobuscp]

For anyone looking for a form of "Bridging Software" to file VAT returns from Excel, I received a promo email this morning from a software house I use for my own SA tax returns since I retired and they also will be providing a bridging solution. Absolute Accounting Software who supply software to accountants in practice or to businesses. My only link is as a satisfied customer.

 

Hope this helps,

 

Colin

Edited February 8, 2019 by antrobuscp
Typo

[Bernard Lamb]

You lot have it easy.

Try a situation where you receive payments in Euros in the Eurozone, keep the money in the bank there, but are resident in the UK and liable for tax on it through your tax return in the UK in £. You have to keep a record of money received each month and make a theoretical conversion and total it up at the end of the tax year. With the way the exchange rate varies it can be difficult. The sting in the tail is that if the £ goes down you have to pay more tax.

The bit I hate with HMRC is the need for a new pin each time you log on.

Bernard 

[Deltic]

So after talking with our Accountant, we shall continue with the spreadsheet provided - which provides the information for the Quarterly Returns. Our Accountant will support us with making MTD inputs.

 

With regard to Import / Export post a No Deal situation.  I followed the HMRC letter to the word, got a registration notification within a matter of days. So sit back and wait. 

 

HMRC do seem to need to really understand the way that small retailers work, if we are spending ages with the digital paperwork it is probably taking you away from customers. Many of us are not able to consider employing more people to contend with all HMRC and others seek from us.  Each year we have to conduct a compliance check with our credit card machine supplier. The questions are more for large scale companies not small traders. 

 

People wonder why there are fewer outlets.

Edited March 4, 2019 by Deltic
text error

[chris p bacon]

27 minutes ago, Richard Croft said:

I do use Quickbooks

<snip>

 I Haven't had to use it for VAT yet but for everything else I would highly recommend it.

Richard

 

While discussing what software might be suitable with my accountant the one they said to avoid at all costs was QB, I don't know why exactly as it wasn't an option that would be pursued,  but they were definately not enamoured with it.

 

Horses for courses.

[Mike at C&M]

If there is anyone out there who will be required to register for "Making Tax Digital", but has not done anything about it yet. I implore you to get the ball rolling now. This is not a process that you can simply do in an evening.

 

As MTD kicks in part way through our financial year, we have to set up our new system (Sage 50) from a datum point from our old system. This has taken time to get things balanced, input this information into Sage, and then test that the two systems produce the same information - they don't! It has taken time to reconcile what the differences are, and how we adapt to them going into the future.

 

This all takes time, and is best sorted as soon as possible. Please don't get caught out by lack of time.

[MRDBLUE17]

Whilst I’m not in the business of model railways I’ve recently spoken with my accountant and the VT transaction software I use has a new digital solution that will come out and is only £75 per annum which is really good value compared to many of those heavily advertised ones out there. The VT software has been easy to learn and you can run multiple businesses if needed from it. 

 

Agree with Mike above if you’ve not done anything about MTD yet I would look into quickly. 

 

Cheers

Mark

[Deltic]

There is a small package available from Vital Tax, this once downloaded will take the information from an Excel spreadsheet - as long as you use it to create the necessary BOX data at present.  This seems so far to be a fairly cheap and easy option, if you already use EXCEL.

 

There are a few MTD exceptions from this April for those VAT registered, but most will have to comply by the end of this year.  Unless there is a very compelling reason for HMRC to allow you to continue without using MTD - there decision not yours.

 

As I said previously our Accountant offered to upload the QuarterlyVAT Return on our behalf, then told us about Vital Tax - so they were looking after us, even if it meant they could not charge us for the extra service.

[Chris M]

I've gone for Sage accounting start. Looks ok but I had to spen a couple of hours on the phone to sage because something went wrong with the sign on. Seems to do what I need at £120 per year . I've just done my VAT return so next job is to register for MTD at HMRC.

Hope that will be straightforward....

[Widnes Model Centre]

3 hours ago, Chris M said:

I've gone for Sage accounting start. Looks ok but I had to spen a couple of hours on the phone to sage because something went wrong with the sign on. Seems to do what I need at £120 per year . I've just done my VAT return so next job is to register for MTD at HMRC.

Hope that will be straightforward....

 

We still haven’t seen anything yet from HMRC. The only information has come from the FSB and advertising from various software companies.

 

Has anyone had official notice?

 

Just completing my VAT return and end of year. 

[Chris M]

I do my VAT online and there is an option to register there. Something to look forward to next week! I look after a company accounts on a purely voluntary basis so it's my own time I'm using up. And I feel a bit "on my own". I'm sure it will all work out ok though.