VAT returns "to be submitted digitally"

[Justin Smith]

I`ve just had this potentially worrying message from HMRC :

We are changing the way you submit your VAT Returns
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.

What the hell does that mean ? ! ?
I do my books and VAT manually on paper but then submit it digitally now, what`s the difference ?

 

[Alan]

From April 2019 - you wont be allowed to do your books manually if you are over the VAT threshold, so you will have to use 'relevant third party' software to keep your records, and the 'relevant third party software' must be able to communicate with the HMRC API

See 'Making Tax Digital'.

 

[Scalloway]

You will need to use software to keep your books from now on if your turnover is above £85,000 per annum. HMRC help and support is here.

https://www.gov.uk/guidance/help-and-support-for-making-tax-digital

 

[Justin Smith]

WHAT ! ! !
That's unbelievable. They`re telling me, a private business owner how I have to do my books ?And I thought the Tories were supposed to be business friendly !
Who is going to teach me how to do use that software ? Who is going to pay for it ? I don`t want to use it, life`s complicated enough. We`re not that far over the VAT threshold anyway.
I really don`t need this.....

 

[KM-Tiger]

Who is going to teach me how to do use that software ? Who is going to pay for it ?

It doesn't have to be expensive or complicated.

I use Accounts Portal, which at £10/month is a bargain. Once you are used to it it will save you time compared to a manual paper system.

 

[Justin Smith]

I do my own books and accounts * (with a bit of help from my ex accountant Dad) myself, and it`s all on paper, as are all our invoices. There are large things like the cost (why should I pay £120 a year so I can pay HMRC ! It`s obscene) and I`ll have to change my whole way of doing my books. Whatever happens I know this is going to be a load of stress and hassle. It`s not out of the question they`ll demand electronic books sooner or later. But there are also smaller things, our work PC is in a place where it`s not convenient to get put reams of invoices to do my books !

* Technically I don`t think I actually need to have a set of accounts, I just do it because my Dad used to do it for me !

 

[Justin Smith]

It doesn't have to be expensive or complicated.

I use Accounts Portal, which at £10/month is a bargain. Once you are used to it it will save you time compared to a manual paper system.

When HMRC told everyone they had to do PAYE digitally they supplied the software "Basic PAYE Tools", why are they not doing that this time ?

 

[Deleted member 59730]

You will need to use software to keep your books from now on if your turnover is above £85,000 per annum. HMRC help and support is here.

https://www.gov.uk/guidance/help-and-support-for-making-tax-digital

You tube videos!!!!!! Can't business people read???

 

[UK Contractor Accountant]

Don't need to pay £120 + per year.

Take a look at Quickfile - it's free for small/medium size businesses.

or move to an area with poor/no Internet. you can get exemption from MTD then.

 

[urstop]

You can also try this, its free, online solution. Look at the video, looks very easy to use as well

taxoptimiser.co.uk

 

[Its4john]

Do company annual accounts need to be done digitally now?
Or is that still to come?

 

[Justin Smith]

It doesn't have to be expensive or complicated.

I use Accounts Portal, which at £10/month is a bargain. Once you are used to it it will save you time compared to a manual paper system.

How will moving to a digital VAT system save me significant amounts of time ? The things which take the most time when using my paper based system is entering the data and paying the suppliers, that will be just the same. Surely it won`t be any faster entering the data via a keyboard than with a pencil, and the latter is more flexible, for instance I can change cost centres whenever I want. Paying the suppliers will be no quicker at all. Having to do my accounts digitally will mean calculating the VAT will be quicker, but, to be frank, that bit doesn`t actually take that long anyway.

 

[Justin Smith]

My opinion of politicians has never been high, though I admit that over the last two and a half years it`s nose dived..... But I just read a quote from Kelly Tolhurst, the Tory "Minister For Small Business" which made me swear involuntarily. She said "I`m determined to do my best to represent the true voice of business" We`ll forget all the unwanted problems of Brexit and just concentrate on the fact she is an enthusiast for this new Digital VAT. There`s more "Digitalisation is the way to go, it`s all about making it easier for business". BOLL0X. Dos she really expect us to believe that politician`s forked tongue take on it ? It`s all about saving the Govt some money and putting the costs onto business.

 

[Mr D]

WHAT ! ! !
That's unbelievable. They`re telling me, a private business owner how I have to do my books ?And I thought the Tories were supposed to be business friendly !
Who is going to teach me how to do use that software ? Who is going to pay for it ? I don`t want to use it, life`s complicated enough. We`re not that far over the VAT threshold anyway.
I really don`t need this.....

Government has been telling you all along how you have to do your books when presenting information away from yourself.
You doing VAT return now you are not deciding how to present things and what information to give - that's decided for you.

 

[Mr D]

I do my own books and accounts * (with a bit of help from my ex accountant Dad) myself, and it`s all on paper, as are all our invoices. There are large things like the cost (why should I pay £120 a year so I can pay HMRC ! It`s obscene) and I`ll have to change my whole way of doing my books. Whatever happens I know this is going to be a load of stress and hassle. It`s not out of the question they`ll demand electronic books sooner or later. But there are also smaller things, our work PC is in a place where it`s not convenient to get put reams of invoices to do my books !

* Technically I don`t think I actually need to have a set of accounts, I just do it because my Dad used to do it for me !

So don't pay HMRC. Reduce your turnover below threshold or end your business.

How you set up your working area is of course up to you. Subject to H&S etc.

 

[Mr D]

When HMRC told everyone they had to do PAYE digitally they supplied the software "Basic PAYE Tools", why are they not doing that this time ?

Perhaps because they don't want to charge you extra tax to pay for giving you free software anymore?

 

[Alan]

Do company annual accounts need to be done digitally now?

As of today, you can still submit paper accounts to CH if they meet the required format. So it is still to come, but as most accountants file electronically I guess it wont be long.

 

[Justin Smith]

So don't pay HMRC. Reduce your turnover below threshold or end your business.

How you set up your working area is of course up to you. Subject to H&S etc.

TBH if I were a bit older this could have been the straw which broke the camels back, I`d wind up the business and retire. I suspect there a significant number of other small business men who feel the same way. It`d be interesting to know how many are encouraged to retire early because of this.

 

[Justin Smith]

As of today, you can still submit paper accounts to CH if they meet the required format. So it is still to come, but as most accountants file electronically I guess it wont be long.

This is the thing I don`t understand, I already file and pay my VAT electronically, so why are the Govt pushing this about doing ones own accounts electronically ? That is to say the bit of ones books for ones own use. One wonders what will come next.
As I`ve said before what makes this all the more annoying, and out of order, is when PAYE had to filed electronically the HMRC provided the software and, critically, the support (that`s phone support, not being directed to You Tube videos or forums).
I really think the Govt are totally out of order on this one, I despise politicians.....

 

[Mark T Jones]

The thing is, you are part of a small minority of businesses who are actually efficient and serious with a paper-based system It is literally a dying art. Until last December my accountant was one, too. Sadly he lost his eye-sight and has now had a stroke I’m genuinely very upset about this, but it has left me with a hell of a mess to clear up

The vast majority of serious small businesses are already somewhat electronic so this will be a relatively small step - probably quite a welcome one

Then there are the millions of not serious small business owners (self proclaimed entrepreneurs) who have no systems whatsoever, who just bumble along ignoring tax, or actively avoiding it until the s**t hits the fan. They often post on the accounts or insolvency forum. - they are also often the ones who whine about Starbucks etc

In the ‘enterprise’ or ‘gig’ economy this last group is a huge problem not just for HMRC but for the country as a whole, and is these who will be brought into line by the new system

I hope that HMRC will be sensible and sensitive in the implementation phase, but overall I’d say this is a very positive step

 

[Justin Smith]

The thing is, you are part of a small minority of businesses who are actually efficient and serious with a paper-based system It is literally a dying art. Until last December my accountant was one, too. Sadly he lost his eye-sight and has now had a stroke I’m genuinely very upset about this, but it has left me with a hell of a mess to clear up

The vast majority of serious small businesses are already somewhat electronic so this will be a relatively small step - probably quite a welcome one

Then there are the millions of not serious small business owners (self proclaimed entrepreneurs) who have no systems whatsoever, who just bumble along ignoring tax, or actively avoiding it until the s**t hits the fan. They often post on the accounts or insolvency forum. - they are also often the ones who whine about Starbucks etc

In the ‘enterprise’ or ‘gig’ economy this last group is a huge problem not just for HMRC but for the country as a whole, and is these who will be brought into line by the new system

I hope that HMRC will be sensible and sensitive in the implementation phase, but overall I’d say this is a very positive step

So, if they`re doing it to increase tax take (not that I`m complaining about that, I pay 100% of the tax I`m due and everyone else should too) and their efficiency, how can they justify not supplying the software and, critically, the support for it. Like they did with the introduction of compulsory online PAYE ?
I have to say I am wary of all this movement to technology, particularly on the part of the public sector and Govt. Despite being a "webmaster" for my site, the basis of my business, I don`t have a smart phone and do NOT want one, but there is a trend where even the Govt will make me a second class citizen without one. And that is not acceptable.

 

[Mr D]

So, if they`re doing it to increase tax take (not that I`m complaining about that, I pay 100% of the tax I`m due and everyone else should too) and their efficiency, how can they justify not supplying the software and, critically, the support for it. Like they did with the introduction of compulsory online PAYE ?
I have to say I am wary of all this movement to technology, particularly on the part of the public sector and Govt. Despite being a "webmaster" for my site, the basis of my business, I don`t have a smart phone and do NOT want one, but there is a trend where even the Govt will make me a second class citizen without one. And that is not acceptable.

Either way the software has to be paid for.

Who better to pay for it, those who will use it or those who will not be using it?

Oh and the smartphone issue, that is your choice. Do not expect the government or anyone else to cater to your choice.

 

[Mr D]

The thing is, you are part of a small minority of businesses who are actually efficient and serious with a paper-based system It is literally a dying art. Until last December my accountant was one, too. Sadly he lost his eye-sight and has now had a stroke I’m genuinely very upset about this, but it has left me with a hell of a mess to clear up

The vast majority of serious small businesses are already somewhat electronic so this will be a relatively small step - probably quite a welcome one

Then there are the millions of not serious small business owners (self proclaimed entrepreneurs) who have no systems whatsoever, who just bumble along ignoring tax, or actively avoiding it until the s**t hits the fan. They often post on the accounts or insolvency forum. - they are also often the ones who whine about Starbucks etc

In the ‘enterprise’ or ‘gig’ economy this last group is a huge problem not just for HMRC but for the country as a whole, and is these who will be brought into line by the new system

I hope that HMRC will be sensible and sensitive in the implementation phase, but overall I’d say this is a very positive step

Sensible and sensitive are two words I would never have thought to see with HMRC in a sentence.

 

[Mark T Jones]

Sensible and sensitive are two words I would never have thought to see with HMRC in a sentence.

They were accompanied by 'hope' - perhaps that should have been 'dream'!

 

[SteveHa]

Oh, for crying out loud. The elephant in the room is the huge chunk of money HMRC got from the Treasury to revolutionise the administration of taxation. The original proposal was that Tax Returns would be a thing of the past, and everyone would file quarterly updates, with a final update (for each business) instead. This was pushed back, and is now pushed back indefinitely after they realised it wasn't so easy.

So, they turned to VAT and decided that would be easier to digitise. They have to show that they've done something with all that money.

Then the software developers got involved (whilst IT contractors were leaving HMRC in droves because of changes to IR35 in the public sector). The developers were very vocal and had HMRC's ear. Of course, they had a vested interest with regards to selling software.

Now here's the crunch, certainly in the shorter term, HMRC will get exactly the same data as it does currently. 9 boxes and that's it. The cost of doing this is entirely on the trader, in terms of additional admin, software, time, education etc.

Oh, and lest we forget, more money for the Revenue when the penalties for failure start landing after the one year soft landing.

 

[mattk]

Either way the software has to be paid for.

Who better to pay for it, those who will use it or those who will not be using it?

Oh and the smartphone issue, that is your choice. Do not expect the government or anyone else to cater to your choice.

The government will still have to develop the mechanism to accept VAT returns from all these compatible software solutions.

It seems bizarre they are removing the ability to submit your VAT return via the HMRC web site. Currently it takes me less than five minutes once a quarter to copy and paste a handful of figures from the spreadsheet I use to manage my business into the web page.

Now I will need to use a piece of software which takes the figures from my spreadsheet and "sends" it to HMRC, thereby introducing an additional step which I don't have to do today.

 

[UK Contractor Accountant]

Making Tax Digital (MTD) project, yesterday’s announcement that the pilot scheme was ready to open up for public testing arrived earlier than many in the software industry expected.

 

[Justin Smith]

Either way the software has to be paid for.

Who better to pay for it, those who will use it or those who will not be using it?

I think we`re putting the cart before the horse here. The Government are raising the revenue, not me, therefore it`s them who should pay for it. Basically I`m expected to pay (both in terms of money and hassle / time) for the privilege of being able to pay them.

Oh and the smartphone issue, that is your choice. Do not expect the government or anyone else to cater to your choice.

No, a private company can (just) cater for just people who have smart phones, they have. I assume, taken into account they`ll lose a certain amount of business, that is their choice.
With the Government, or, arguably, any other public sector, or pseudo public sector, organisation (e.g. the train companies or water companies) it`s a public service. It`s not for them to disadvantage sections of the public who either cannot afford, or do not want, or cannot cope with for one reason or another, a smart phone. That is very much the thin end of the wedge.

 

[Mr D]

I think we`re putting the cart before the horse here. The Government are raising the revenue, not me, therefore it`s them who should pay for it. Basically I`m expected to pay (both in terms of money and hassle / time) for the privilege of being able to pay them.



No, a private company can (just) cater for just people who have smart phones, they have. I assume, taken into account they`ll lose a certain amount of business, that is their choice.
With the Government, or, arguably, any other public sector, or pseudo public sector, organisation (e.g. the train companies or water companies) it`s a public service. It`s not for them to disadvantage sections of the public who either cannot afford, or do not want, or cannot cope with for one reason or another, a smart phone. That is very much the thin end of the wedge.

Government gets its money from among other things taxation.
Do you want to pay for it yourself or via government taxing you to pay for it? With suitable markup on the amount taxed to cover government expenses.

Your choice to not use a smartphone.

 

[Justin Smith]

The government will still have to develop the mechanism to accept VAT returns from all these compatible software solutions.

It seems bizarre they are removing the ability to submit your VAT return via the HMRC web site. Currently it takes me less than five minutes once a quarter to copy and paste a handful of figures from the spreadsheet I use to manage my business into the web page.

Now I will need to use a piece of software which takes the figures from my spreadsheet and "sends" it to HMRC, thereby introducing an additional step which I don't have to do today.

Nobody has yet managed to tell me how this digitising of the VAT (and my accounts) will save me significant amounts of time. As you say, actually completing the VAT return (already Online as it happens....) doesn`t take long at all. You copy and paste the figures from your software, I from my accounts book. And, in fact, doing ones books, surely it`s entering all the data that takes the time, and you still have to do that or a computer base accounts system surely ?

 

[UK Contractor Accountant]

And, in fact, doing ones books, surely it`s entering all the data that takes the time

no not really. you can direct link your business bank account to the software and it will import your transactions straight in. No keying in required.

Also with something like Receipts Bank it will put your invoices straight into your accounts package just from taking a photo via an app etc.

 

[Mr D]

Nobody has yet managed to tell me how this digitising of the VAT (and my accounts) will save me significant amounts of time. As you say, actually completing the VAT return (already Online as it happens....) doesn`t take long at all. You copy and paste the figures from your software, I from my accounts book. And, in fact, doing ones books, surely it`s entering all the data that takes the time, and you still have to do that or a computer base accounts system surely ?

Other people already use methods that save them time.
They are less impacted on time saving than you by such methods.

Entering 3 months worth of stuff into software plus doing VAT return is what? 20 minutes a quarter or so? 15 minutes? Less?
Not much time to save.

 

[UK Contractor Accountant]

18th Oct 2018
Accountants can now offer FreeAgent for free to existing RBS/NatWest clients, which the company is touting as a neat way to solve the MTD problem.

 

[Justin Smith]

I am writing to Kelly Tolhurst, it`ll be interesting to see if she replies, I`d have thought the best I could hope for would be an E Mail from one of her staff, possibly just a generalised one. At least, if that`s all I get, it`ll confirm my low opinion of politicians, still, I may be surprised...... Obviously I don`t expect them to pull it, but I`d at least like to know how they can justify not giving the same sort of support they gave for the movement to online PAYE. I seem to remember the "Basic PAYE" programme was only available for companies under a certain size.

 

[UK Contractor Accountant]

software will be available
Businesses and agents will be able to make use of free software to meet MTD requirements

Current position
For businesses it depends; it is extremely unlikely that any provider will make free software available to agents.

Income tax: the government has given an undertaking that there will be free MTD for income tax software for the most straightforward businesses (ie, those that do not require VAT or PAYE functionality). HMRC will not be developing this software itself unless perhaps the market does not respond and provide some free products – HMRC currently expects that it will.

VAT: the government has made no commitment to provide free software for MTD for VAT so it depends on the whether the market provides free products.

 

[Justin Smith]

software will be available
Businesses and agents will be able to make use of free software to meet MTD requirements

Current position
For businesses it depends; it is extremely unlikely that any provider will make free software available to agents.

Income tax: the government has given an undertaking that there will be free MTD for income tax software for the most straightforward businesses (ie, those that do not require VAT or PAYE functionality). HMRC will not be developing this software itself unless perhaps the market does not respond and provide some free products – HMRC currently expects that it will.

VAT: the government has made no commitment to provide free software for MTD for VAT so it depends on the whether the market provides free products.

Am I right in understanding this is going to spread "to income tax" ? But that`s already submitted online isn`t it ? What else will they require ?

On the last point you make, why would the market provide a free product ? What`s in it for them ? The only body that has much to gain from all this is HMRC, it`s them who should be footing the soddin` bill.....

 

[Mr D]

The only body that has much to gain from all this is HMRC, it`s them who should be footing the soddin` bill.....

You in other words. You paying one way or another.
With the exception of lending money, where does government money come from? The public.

 

[UK Contractor Accountant]

Am I right in understanding this is going to spread "to income tax"

Yep but delayed due to BREXIIIIIIIIIIIIIIIIIIIIIT!

 

[Justin Smith]

You in other words. You paying one way or another.
With the exception of lending money, where does government money come from? The public.

How far do you want to go with this ? You`re not arguing for the sake of it surely ? If I need a heart bypass on the NHS, I don`t as it happens, should I pay for it directly, after all, I`m paying one way or another anyway ? The fact is HMRC want to save some money and/or increase the tax take which amounts to the same thing. They are then asking me to pay extra so they can do the latter and for the privilege of me being able to pay them thousands of pounds ?

Basically I`m a business not that far over the VAT threshold, but a retail business. A retail business just over the VAT threshold is not a big business, yet I`m being lumped in with multi million t/o businesses to whom the extra overhead of this is a minor issue. In fact it probably isn`t an issue at all because all businesses of that size will use an accountant or even have their own. These are the facts of the matter, and I`ve a right to feel p1ssed off.

 

[UK Contractor Accountant]

have a read the Article on here by Francois

https://www.ukbusinessforums.co.uk/articles/can-bridging-software-solve-the-mtd-conundrum.897/