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Can bridging software solve the MTD conundrum?

  1. Making tax digital
    Francois Badenhorst

    Francois Badenhorst Business Editor, UKBF & AWEB Staff Member

    91 18
    1 |

    “What the hell does that mean?!?” To be fair, that’s probably not the first time some variation of this phrase has been uttered re: Making Tax Digital. This incarnation of ‘MTD WTF’ happened on the forums earlier this week.

    UKBF member Justin Smith turned to the community asking for help after receiving a message from MTD: “From April 2019, VAT registered businesses with a turnover of £85,000 or above must use relevant third party software to submit their VAT Returns.”

    “If I do my books and VAT manually on paper but then submit it digitally, what’s the difference?” he asked.

    Well, there’ll be a difference, of course. HMRC’s communique is quite clear. So for Justin Smith – and others that compile their accounts in the analogue fashion – it’ll be a disruption. You will also need to pay for accounting software.

    But there is some good news: it’ll be less disruptive than originally planned.

    The original MTD proposals cut spreadsheets out of the loop entirely. It was only after intense lobbying by accounting bodies and other stakeholders that HMRC yielded, coining the neologism ‘bridging software’.

    This bridging software would fix the spreadsheet conundrum by digitally linking a spreadsheet to HMRC via an MTD-ready software product. Now, that’s a digital spreadsheet – but at least it’s still a spreadsheet.

    It was confusing for a while. HMRC talked ‘bridging solutions’ but they were slow to appear. In recent times, however, there’s been a steady trickle of new products.

    Avalara MTD Filer is a free product which will read data from an Excel spreadsheet, and submit the VAT return figures to HMRC in the format required under MTD. The American accounting giant Intuit has announced its bridging solution, too.

    Companies such as Clear Books, TaxCalc, Wolters Kluwer and DataDear are offering their own variations.

    Clear Books Micro, for example, replaces a client’s Excel spreadsheet with an equivalent, free online grid program to record sales, cash in and expenses, while TaxCalc’s VAT Filer app will import VAT data from a spreadsheet to feed an online MTD for VAT submission.

    QuickBooks’ solution is akin to TaxCalc’s method, allowing businesses to simply stick with Excel, rather than replacing it. It will be tacked onto QuickBooks’ suite of MTD-ready software and will be accessible to those with an active QuickBooks Online subscription.

    It’ll likely be scant comfort to business owners like Justin Smith, but it is, at the very least, a silver lining.

  2. The Byre

    The Byre UKBF Ace Free Member

    9,765 3,944
    So, on reading that thread, I got a hold of our accounts person and asked for a sit-rep. She came back yesterday with a big grin on her face and told me that she had been talking to our accountants and they were every bit as in-the-dark as we are.

    "Nobody knows anything!" she told me. "It seems to be like Brexit - one big F-up!"

    She assured me that the accountants told her that the 'bridging solution' is unusable and HMRC are all lost-at-sea and cannot give the major accountancy firms any sensible answers.

    So we shall be getting ready for MTD in the same way we are getting ready for Brexit - by doing absolutely nothing!
    Posted: Oct 19, 2018 By: The Byre Member since: Aug 13, 2013
    Bob Morgan likes this.