Easy to use MTD VAT software

[ITUK]

I thought doing vat returns was just a case of me submitting my invoices I;ve given to customers and receipts from items I buy for the business but it looks like there's more to it, can someone please point me to something that is easy to understand on how to do it correctly

 

[numbersrule]

How to fill in and submit your VAT Return (VAT Notice 700/12)

Find out how to fill in your VAT return, about using VAT accounting schemes and how to submit your return electronically.

www.gov.uk

 

[Scalloway]

You can use accounting software to keep your business records. Most such software available in the UK will let you submit returns electronically, which is what HMRC require.

Find software that's compatible with Making Tax Digital for VAT

Check which software packages you can use to keep VAT records and submit your VAT Returns.

www.gov.uk

 

[Paul Kelly ICHYB]

I thought doing vat returns was just a case of me submitting my invoices I;ve given to customers and receipts from items I buy for the business

It can be - give them to a book keeper or accountant! Then you or they submit to HMRC.

 

[MyAccountantOnline]

I thought doing vat returns was just a case of me submitting my invoices I;ve given to customers and receipts from items I buy for the business but it looks like there's more to it, can someone please point me to something that is easy to understand on how to do it correctly

No you don't submit the invoices - you need to keep them in case HMRC want to see them.

You need to record the sales income and expenses and the VAT on those transactions to complete a VAT return.

You'll find lots of good software which makes the task much quicker and easier.

What sort of business do you have and roughly how many transactions do you have each month - that will help with a software recommendation.

 

[ITUK]

No you don't submit the invoices - you need to keep them in case HMRC want to see them.

You need to record the sales income and expenses and the VAT on those transactions to complete a VAT return.

You'll find lots of good software which makes the task much quicker and easier.

What sort of business do you have and roughly how many transactions do you have each month - that will help with a software recommendation.

It's a small health and wellness business, we were due to open on the 20th but due to ill health (Ironically) it's been delayed. We anticipate low numbers for the first month or so once properly open

I have been looking at the Anna Money software, I think what I need is to learn how to use XLS for keeping records of sales and purchases

 

[MyAccountantOnline]

It's a small health and wellness business, we were due to open on the 20th but due to ill health (Ironically) it's been delayed. We anticipate low numbers for the first month or so once properly open

I have been looking at the Anna Money software, I think what I need is to learn how to use XLS for keeping records of sales and purchases

In my opinion and experience Excel isn't good for record keeping; it's prone to errors and time consuming. I really wouldn't spend time learning how to use it, use the time instead on some good accounting software which has been designed to keep accounting records and submit VAT returns.

I generally recommend Accounts Portal and or FreeAgent to my clients as I know and use both myself and they work well. I work with new and small businesses.

If you use an accountant they may well be able to pass on a discount for accounting software and bear in mind FreeAgent is free if your business banks with NatWest, RBS, Ulster bank or Mettle.

 

[Daybooks]

In my opinion and experience Excel isn't good for record keeping; it's prone to errors and time consuming. I really wouldn't spend time learning how to use it, use the time instead on some good accounting software which has been designed to keep accounting records and submit VAT returns.

There may be good reasons to choose commercial software over Excel (and indeed vice versa) but “prone to error” and “time consuming” cannot be any of them.

Why are you more likely to key the wrong figure into Excel than you are into the commercial software?

If you were to key in the worng figure spotting it within a spreadsheet listing is far easier than wading through some often meaningless report producd by the software. Correcting it within Excel would be simply changing the figure.

As you know the checks and balances come through reconciliation which is down to the user regardless of chosen application.

Just my view of course.

 

[MyAccountantOnline]

There may be good reasons to choose commercial software over Excel (and indeed vice versa) but “prone to error” and “time consuming” cannot be any of them.

Why are you more likely to key the wrong figure into Excel than you are into the commercial software?

If you were to key in the worng figure spotting it within a spreadsheet listing is far easier than wading through some often meaningless report producd by the software. Correcting it within Excel would be simply changing the figure.

As you know the checks and balances come through reconciliation which is down to the user regardless of chosen application.

Just my view of course.

I truly don't think I have ever seen a clients Excel sheets which have not contained atleast one error.

I dont dislike Excel, I use it daily, but it's not the best tool for bookkeeping in 2024.

I am firmly of the opinion that manually entering payments and receipts in an Excel takes significantly longer than using good accounting software.

Bank imports mean the days of manually entering transactions and having to find bank differences are long gone.

 

[numbersrule]

Bank imports mean the days of manually entering transactions and having to find bank differences are long gone.

That may be true when all transactions are via the bank.

But there are still plenty of businesses still dealing with up to 40% of turnover in pure cash, sometimes more, necessitating a Cash In Hand Account in any Accounting Software. Then the reconciliation is against Cash Held. An altogether different scenario to Bank Feeds.

But I agree that certainly in Xero, Bank Feeds do force a correct reconciliation for the Bank itself because you are compelled to enter the Purchase Invoice or Receipt or Sales Invoice or Bank Transfer correctly.

 

[GLAbusiness]

Using Excel for accounts is like using a hammer on a screw

 

[Daybooks]

I truly don't think I have ever seen a clients Excel sheets which have not contained atleast one error.

I dont dislike Excel, I use it daily, but it's not the best tool for bookkeeping in 2024.

I am firmly of the opinion that manually entering payments and receipts in an Excel takes significantly longer than using good accounting software.

Bank imports mean the days of manually entering transactions and having to find bank differences are long gone.

A client’s developed spreadsheet may well be poorly written but Excel contains a powerful programing language that matches anything commercial software can provide. Thus Excel can be anything from a listing to a well developed application.

I use Excel through choice because it is simply quicker and more efficient. Try recording ten sales invoices into a spreadsheet and the same ten invoices into commercial software. Mind you – you could import the data from the spreadsheet into the software which sort of proves the point! Also you don’t have to export the data from the commercial software to Excel for when you want some proper analysis.

You can import bank csv files into Excel too and can convert a whole year’s data in a few seconds into an informative properly analysed cash book. I appreciate bank feeds are useful for soletraders and owner managed businesses but it does make it reactive rather than proactive. But that’s another topic.

Excel is far more than a spreadsheet. As always you pays your money; you makes your choice.

 

[Daybooks]

Using Excel for accounts is like using a hammer on a screw

Blame the tools.

 

[MyAccountantOnline]

A client’s developed spreadsheet may well be poorly written but Excel contains a powerful programing language that matches anything commercial software can provide. Thus Excel can be anything from a listing to a well developed application.

I use Excel through choice because it is simply quicker and more efficient. Try recording ten sales invoices into a spreadsheet and the same ten invoices into commercial software. Mind you – you could import the data from the spreadsheet into the software which sort of proves the point! Also you don’t have to export the data from the commercial software to Excel for when you want some proper analysis.

You can import bank csv files into Excel too and can convert a whole year’s data in a few seconds into an informative properly analysed cash book. I appreciate bank feeds are useful for soletraders and owner managed businesses but it does make it reactive rather than proactive. But that’s another topic.

Excel is far more than a spreadsheet. As always you pays your money; you makes your choice.

We are clearly going to disagree on this.

I am firmly of the opinion that in 2024 Excel is simply not the tool for the job. Trying to use it for bookkeeping and VAT is like re-inventing the wheel.

 

[Scalloway]

I started using spreadsheets as an accountant probably 40 years ago (Supercalc 2 if you're interested). As no cheap commercial software was available when I became treasurer of a licenced club I developed my own spreadsheet bookkeeping spreadsheets which took things up to the final accounts.

When something like VT Cashbook is available for free I would never return to this arrangement due to the time wasted everytime I changed something I had to trace errors through the system to get it right again.

 

[Cabin Fever]

Our book keeping software started life as a MS Access database which then evolved into a browser based solution that is run off-line by choice, on a local machine.

Dealing with MTD was surprisingly easy - the system generates the numbers and the bridging software submits to HMRC.

It's certainly not for everyone, but given a particular set of circumstances and IT skills - running a home-made book-keeping system can be a daily source of satisfaction, even joy.

 

[Daybooks]

Our book keeping software started life as a MS Access database which then evolved into a browser based solution that is run off-line by choice, on a local machine.

Dealing with MTD was surprisingly easy - the system generates the numbers and the bridging software submits to HMRC.

It's certainly not for everyone, but given a particular set of circumstances and IT skills - running a home-made book-keeping system can be a daily source of satisfaction, even joy.

Steady on! Some secrets are best kept to ourselves.

 

[YasmeenLondon]

In my opinion and experience Excel isn't good for record keeping; it's prone to errors and time consuming. I really wouldn't spend time learning how to use it, use the time instead on some good accounting software which has been designed to keep accounting records and submit VAT returns.

I generally recommend Accounts Portal and or FreeAgent to my clients as I know and use both myself and they work well. I work with new and small businesses.

If you use an accountant they may well be able to pass on a discount for accounting software and bear in mind FreeAgent is free if your business banks with NatWest, RBS, Ulster bank or Mettle.

Spot on.

My accountant, in the beginning, suggested I use Excel, it was time-consuming and complicated which resulted in the occasional mistake here and there, no mistakes since using FreeAgent and the whole process is significantly quicker.

 

[MyAccountantOnline]

Spot on.

My accountant, in the beginning, suggested I use Excel, it was time-consuming and complicated which resulted in the occasional mistake here and there, no mistakes since using FreeAgent and the whole process is significantly quicker.

Great to hear. It's a repsonse I often get when I recommend software too.

 

[numbersrule]

Spot on.

My accountant, in the beginning, suggested I use Excel, it was time-consuming and complicated which resulted in the occasional mistake here and there, no mistakes since using FreeAgent and the whole process is significantly quicker.

I wouldn't want to worry you, but have you considered the possibility that online accounting software can hide errors and make some errors difficult to detect?

The reason for this, particularly with VAT returns, for example, is that online accounting software is good at matching the two sides of the double entry because the software creates the double entry for you.

This is different to Excel, in which you can get one side of the double entry wrong, and you will be alerted to this by an imbalance. This is where Excel, provided it is used correctly, diligently and thoroughly can have advantages.

There is always a price to be paid for speed and simplicity.

 

[MyAccountantOnline]

I wouldn't want to worry you, but have you considered the possibility that online accounting software can hide errors and make some errors difficult to detect?

The reason for this, particularly with VAT returns, for example, is that online accounting software is good at matching the two sides of the double entry because the software creates the double entry for you.

This is different to Excel, in which you can get one side of the double entry wrong, and you will be alerted to this by an imbalance. This is where Excel, provided it is used correctly, diligently and thoroughly can have advantages.

There is always a price to be paid for speed and simplicity.

I disagree I've seen way more mistakes in records where clients have tried to use Excel and it's very rare indeed that clients create Excel sheets which deal with double entry.

I really do not think using good software hides errors or makes them difficult to detect compared to Excel sheets. In fact I'd say the exact opposite is the case.

Again I'm not knocking Excel, I use it daily, but in 2024 I just don't use it for bookkeeping.

 

[DontAsk]

I wouldn't want to worry you, but have you considered the possibility that online accounting software can hide errors and make some errors difficult to detect?

The reason for this, particularly with VAT returns, for example, is that online accounting software is good at matching the two sides of the double entry because the software creates the double entry for you.

It can only create it from your input.

Can you give an example of mainstream accounting software hiding errors of it's own making?

 

[Daybooks]

It can only create it from your input.

Can you give an example of mainstream accounting software hiding errors of it's own making?

Horizon developed by Fujitsu.
PS No apostrophe needed.

 

[DontAsk]

Horizon developed by Fujitsu.

How many small businesses (apart from Post Offices) do you know who use Horizon?

Horizon was not about double entry bookkeeping for VAT returns. It was entering orders into the system and logging the cash taken in the till. More an EPOS system, so a poor example.

 

[numbersrule]

It can only create it from your input.

Can you give an example of mainstream accounting software hiding errors of it's own making?

Of course, that is true, the mainstream softwares can only create errors from your input and I do not dispute that.

What I meant by my earlier post, is that, for example if you enter a purchase invoice with a zero VAT rate instead of what should have been a 20% VAT rate, then all the numbers will still balance. The only way that error would be detected in the VAT Return is if you 'manually' go through the individual VAT Rates and happen to notice that that supplier should have had the 20% VAT rate applied. I call that hiding errors because you are under the false illusion that you think you have nicely accurate balanced accounts.

This is different to the way my Double Entry Excel system worked which involved entering in three different cells, meaning that if the VAT was not entered correctly once then the numbers would not balance.

 

[MyAccountantOnline]

Of course, that is true, the mainstream softwares can only create errors from your input and I do not dispute that.

What I meant by my earlier post, is that, for example if you enter a purchase invoice with a zero VAT rate instead of what should have been a 20% VAT rate, then all the numbers will still balance. The only way that error would be detected in the VAT Return is if you 'manually' go through the individual VAT Rates and happen to notice that that supplier should have had the 20% VAT rate applied. I call that hiding errors because you are under the false illusion that you think you have nicely accurate balanced accounts.

This is different to the way my Double Entry Excel system worked which involved entering in three different cells, meaning that if the VAT was not entered correctly once then the numbers would not balance.

The software I use (and I suspect it's the case for almost all bookkeeping software) will prompt the user to enter the correct VAT based upon the supplier and the type of expense.

A spreadsheet used by a typical small business client will very rarely be set up in such a way that this type of information will be added automatically. A typical clients spreadsheet will rely upon a client manually entering the VAT and ensuring the column total is correct. I've so often seen spreadsheets where VAT errors are made as the column total hasn't included all the figures.

The type of error you are referring to isn't a double entry error, it's a straightforward error, and it's certainly not hidden.

Anyone creating a VAT return using any software should be checking the entries before submitting the VAT return to HMRC which will mean running a report of the transactions and checking the VAT claimed is correct and that's certainly something which is also much easier to do with proper accounting software.

 

[numbersrule]

The software I use (and I suspect it's the case for almost all bookkeeping software) will prompt the user to enter the correct VAT based upon the supplier and the type of expense.

A spreadsheet used by a typical small business client will very rarely be set up in such a way that this type of information will be added automatically. A typical clients spreadsheet will rely upon a client manually entering the VAT and ensuring the column total is correct. I've so often seen spreadsheets where VAT errors are made as the column total hasn't included all the figures.

The type of error you are referring to isn't a double entry error, it's a straightforward error, and it's certainly not hidden.

Anyone creating a VAT return using any software should be checking the entries before submitting the VAT return to HMRC which will mean running a report of the transactions and checking the VAT claimed is correct and that's certainly something which is also much easier to do with proper accounting software.

Absolutely, I do not dispute any of this.

But this is why, the way I see it, online accounting software does still require a bookkeeper.

From some other posts you might think that online accounting software somehow 'does it all for you'.

 

[MyAccountantOnline]

Absolutely, I do not dispute any of this.

But this is why, the way I see it, online accounting software does still require a bookkeeper.

From some other posts you might think that online accounting software somehow 'does it all for you'.

I was responding to your post when you stated -

''online accounting software can hide errors and make some errors difficult to detect''

and said

''This is different to Excel, in which you can get one side of the double entry wrong, and you will be alerted to this by an imbalance. This is where Excel, provided it is used correctly, diligently and thoroughly can have advantages.''

I dont agree with you.

Whether a small business needs a bookkeeper is a completely different question and my answer to that, as an accountant, will depend on many factors.

 

[Newchodge]

I wouldn't want to worry you, but have you considered the possibility that online accounting software can hide errors and make some errors difficult to detect?

The reason for this, particularly with VAT returns, for example, is that online accounting software is good at matching the two sides of the double entry because the software creates the double entry for you.

This is different to Excel, in which you can get one side of the double entry wrong, and you will be alerted to this by an imbalance. This is where Excel, provided it is used correctly, diligently and thoroughly can have advantages.

There is always a price to be paid for speed and simplicity.

Surely, the difficulty with Excel is setting it all up in the first place. A lot of people cannot do that. You cannot use it for accounts by just putting numbers anywhere!

 

[DontAsk]

What I meant by my earlier post, is that, for example if you enter a purchase invoice with a zero VAT rate instead of what should have been a 20% VAT rate, then all the numbers will still balance. The only way that error would be detected in the VAT Return is if you 'manually' go through the individual VAT Rates and happen to notice that that supplier should have had the 20% VAT rate applied. I call that hiding errors because you are under the false illusion that you think you have nicely accurate balanced accounts.

That's just an error, nothing to do with double entry bookkeeping, which you specifically cited.

This is different to the way my Double Entry Excel system worked which involved entering in three different cells, meaning that if the VAT was not entered correctly once then the numbers would not balance.

How does your solution know you have entered the VAT correctly? If it knows the rate that should be applied to a particular transaction then that's no different to much accounting software. It still cannot know you have set the rate correctly.

But this is why, the way I see it, online accounting software does still require a bookkeeper.

All accounting software needs a bookkeeper. That doesn't mean you have to employ someone. I do my own bookkeeping. Never had any errors. My accountant once complimented me on how well organised and straightforward everything was for them at year end.

From some other posts you might think that online accounting software somehow 'does it all for you'.

Other than what I use an accountant for at year end, it does. Well, I use local software, not cloud based, but it's the same principle.

 

[Newchodge]

I disagree I've seen way more mistakes in records where clients have tried to use Excel and it's very rare indeed that clients create Excel sheets which deal with double entry.

I really do not think using good software hides errors or makes them difficult to detect compared to Excel sheets. In fact I'd say the exact opposite is the case.

Again I'm not knocking Excel, I use it daily, but in 2024 I just don't use it for bookkeeping.

MayI suggest that the over-automated accounts packages do create problems. If you have a number of entries on the same date and the same value, the automated reconciliation must struggle, or make mistakes?

 

[MyAccountantOnline]

Surely, the difficulty with Excel is setting it all up in the first place. ...

Yes it is

 

[MyAccountantOnline]

MayI suggest that the over-automated accounts packages do create problems. If you have a number of entries on the same date and the same value, the automated reconciliation must struggle, or make mistakes?

No system is perfect but I dont think I've ever seen that type of scenario create an issue.

When a system is importing transactions it will use various data typically including the transaction date, supplier/customer name and amount and the user will then allocate the transaction or agree the automated suggested allocation is correct.

What sort of problem would you envisage your scenario causing?

 

[Newchodge]

No system is perfect but I dont think I've ever seen that type of scenario create an issue.

When a system is importing transactions it will use various data typically including the transaction date, supplier/customer name and amount and the user will then allocate the transaction or agree the automated suggested allocation is correct.

What sort of problem would you envisage your scenario causing?

I don't use the automated reconciliation - I don't have a huge number of transactions and I prefer to reconcile manually. I just wondered how it would cope with multiple similar entries.

 

[MyAccountantOnline]

I don't use the automated reconciliation - I don't have a huge number of transactions and I prefer to reconcile manually. I just wondered how it would cope with multiple similar entries.

I have seen issues with accounting software - it's certainly not perfect but I dont think I've ever seen an issue with this type of scenario.

 

[MikeJ]

I started using spreadsheets as an accountant probably 40 years ago (Supercalc 2 if you're interested). As no cheap commercial software was available when I became treasurer of a licenced club I developed my own spreadsheet bookkeeping spreadsheets which took things up to the final accounts.

When something like VT Cashbook is available for free I would never return to this arrangement due to the time wasted everytime I changed something I had to trace errors through the system to get it right again.

Nice to see a fellow Supercalc veteran. We went from v1 to v3, and suddenly it had graphs!!

 

[Daybooks]

How many small businesses (apart from Post Offices) do you know who use Horizon?

Horizon was not about double entry bookkeeping for VAT returns. It was entering orders into the system and logging the cash taken in the till. More an EPOS system, so a poor example.

Horizon by Fujitsu was for the Post Office (although Access Accounts [Access Group] did have a product called Horizon which was very good).

QuickFile is also an example. The Aged Debtors and Creditors reports can differ from their respective control accounts and be difficult if not impossible to get to the truth as detailed transactional ledgers are scarce or incomplete.

Horizon is both an EPOS and a double entry system (although the latter is a contentious issue). Double entry serves the twofold effect of any transaction and thus VAT accounting simply falls into it if it is required. It is therefore a very good and contemporaneous example. Ask any of the sub postmasters or mistresses whether they agree their mainstream accounting system losing transactions or failing to apply double entry principles is a good example or not.

You can refine the question or parameters (Post Office style) to get the answer you desire. As seen in this thread many mantras are trotted out but it does not make them true; but may lead to missed opportunities.

 

[Daybooks]

I don't use the automated reconciliation - I don't have a huge number of transactions and I prefer to reconcile manually. I just wondered how it would cope with multiple similar entries.

Nice to see someone taking proactive control of their business.

 

[Daybooks]

Nice to see a fellow Supercalc veteran. We went from v1 to v3, and suddenly it had graphs!!

You used to be able to create the graphs in one click too! Although I do remember that on the early Mac version of Excel. Some of the old games used to have a top right button that would display a spreadsheet. I think the idea was to pretend you were working rather than playing. Those were the days.

 

[paulears]

I disliked all my accountant's suggestions until he got me onto freeagent. The modest cost makes my life easy. My business is simple - I submit invoices, I get paid into my bank account and I have bills to pay. I'm VAT registered but a sole trader, so I have drawings and personal stuff mixed in with the business and Freeagent lets me keep things very straight forward and just presents me with bank transactions for money in and out, but then suggests matching invoices and bills. It works really well, and mistakes usually generate queries. I can use it on all my computers and phones and I can take a picture of a receipt and stick that into freeagent. It's great for finding customers, and amounts. I can easily find things. I can generate an invoice and send it to the customer within the software. It's really friendly and the more you enter, the better it makes guesses as in - you just got paid £436, is it this invoice. You then say yes, or no. It also manages the VAT. As long as I have approved all the ins and outs at the quarter end, I simply press the send to HMRC button, and a few minutes later HMRC email me the confirmation. The invoice system can also use pre-programmed items, for when you do lots at the same price - saves you lots of typing. For me, it also means lower accountancy bills because even though it is not their ideal system, they can see what I'm doing if they are slack and do tidying. My common one is entering a wrong value - like £4.39 when it was £4.29 - this means it does not clear and often I don't spot it. It just needs the amount changing, but the double check facility works really well.