Getting ready for HMRC new MTD requirements

[markWML]

From April 2019, all Limited companies with a turn over great than 85k p.a will need to use MTD compliant software.

Not being computer savvy, I have a few questions/concerns.

My equipment supply company turns over around 200k p.a, so I need to comply. For the past 20 years or so, I have pretty much keep't my book the old fashioned way (paper records etc). I use a relatively old PC (windows 7 and Norton security) and I do not use online banking (still using a cheque book to make some payments).

A typical month involves two or three payments in (sales) and roughly twenty payments out (expenditures). I normally simply log on to my VAT account and manually fill in my VAT returns. Simple but has worked fine.

Am I alone or are small companies still doing things the old fashioned way and struggling to get their heads around online banking and account software requirements? I seem to think that this is also another outgoing monthly cost for getting up to date, software cost and possibly having to update my PC etc.

What software are people using and does any one know if Barclays business offer a free MTD compliant version?

 

[ChrisCallaghan]

Hi Mark,
I think you have stumbled into the wrong forum - this one deals with insolvency. I would try Accounts and Finance or the General Business forums.
- and yes there are still businesses like yours using traditional methods - if it works for you, why not? Obviously if HMRC issues new rules we all have to jump!

 

[The Byre]

QuickFile is free and MTD compliant.

Another one is Bokio.

Both work on being free but offer a help-line for a subscription.

 

[markWML]

Ooops, my mistake, I'll re-post in A & F

 

[markWML]

After doing a bit of research (and still very confused), Sage "accounting start" at £6 (on offer) looks like likely. It's certainly cheaper than the £20 to £30 per option my accountant suggested. I'll set up a meeting with my accountant for some set up advice and to check he is ok with Sage.

Could some one explain these few basic questions please?

(1) Will need to switch to online banking? (currently not using online banking, Barclays).

(2) As MTD is cloud based, will my old-ish PC (windows 7) be ok?

(3) I receive all my expense invoices (about 200 items per year) by post, I pay them by cheque. My sales invoices (about 12 items per year) are sent by post too, they are usually paid to me by BAC's. Will I still be manually entering details into the software for VAT returns? or will my monthly bank statement simply be mirrored on VAT returns?

(4) Is the software linked into my business bank account? This is one area I am worried about, I do not update/replace PC's that often and I'm concerned about online security/fraud etc.

Sorry if these questions seem stupid, I am just trying to get my head around the basics.

Thank you in advance to any one who takes the time to enlighten me

 

[NicoJ]

This is my understanding of MTD - to answer your queries:
1) No you don't need online banking although it may be beneficial to you

2) As long as the internet connection is OK then it should be fine as far as I'm aware

3) You can enter the details manually into the software, the electronic/cloud bit is pulling the information directly from the software to complete the return. You won't be able to key in your VAT figures as you do now.

4) No you don't although again it may be beneficial to you. Your bookkeeping will need to have the bank transactions in there of course but these can be manually entered.

I would look at Quickfile as someone else has suggested, it's free up to a certain amount of transactions.

 

[MyAccountantOnline]

@markWML you are certainly sadly not alone. MTD is going to fundamentally change how many small businesses maintain their accounting records.

Ask your accountant if he/she will work with Accounts Portal, it works well, is easy to use and is approved for Making VAT Digital. It's just £6 plus VAT for my firms clients your accountant may well be able to get a similar deal.

 

[markWML]

Thank's NicoJ, much appreciated.

 

[MyAccountantOnline]

After doing a bit of research (and still very confused), Sage "accounting start" at £6 (on offer) looks like likely. It's certainly cheaper than the £20 to £30 per option my accountant suggested. I'll set up a meeting with my accountant for some set up advice and to check he is ok with Sage.

Could some one explain these few basic questions please?

(1) Will need to switch to online banking? (currently not using online banking, Barclays).

(2) As MTD is cloud based, will my old-ish PC (windows 7) be ok?

(3) I receive all my expense invoices (about 200 items per year) by post, I pay them by cheque. My sales invoices (about 12 items per year) are sent by post too, they are usually paid to me by BAC's. Will I still be manually entering details into the software for VAT returns? or will my monthly bank statement simply be mirrored on VAT returns?

(4) Is the software linked into my business bank account? This is one area I am worried about, I do not update/replace PC's that often and I'm concerned about online security/fraud etc.

Sorry if these questions seem stupid, I am just trying to get my head around the basics.

Thank you in advance to any one who takes the time to enlighten me

1. No reason to with regards to MTD as such, but the facility to import bank transactions etc is going to save you time and using online banking is probably also going to save you bank charges.

2. I dont know for sure but any old PC is eventually going to struggle. A new PC will be much quicker and easier to use. I think you'll find its money well spent.

3. See 1 above - if you continue as you are you are going to have to enter all transactions manually as you say effectively mirroring your bank statement

4. It can be, but doesn't have to be. I use Accounts Portal myself and download my online statements myself and upload them to Accounts Portal it takes seconds but I choose not to have an automatic feed.

 

[NicoJ]

Thank's NicoJ, much appreciated.

You're welcome. Nicola appears to agree with my answers too so that should give you some more reassurance about how you're going to tackle MTD.

 

[The Byre]

I wouldn't get too excited over MTD. Our accountants are a big company with a few hundred employees and they are yet to give us clear guide lines on MTD as they can't get any sense out of HMRC.

As far as we are concerned, MTD is a bridge we shall cross, but only if and when we reach the river. This government and its accompanying civil service seem to be making such a complete hash of everything they touch, that I for one have ceased to take any pronouncement they make seriously.

 

[paulears]

I am just about to switch to a cloud based monthly subscription service for exactly the same reasons. I'm perfectly happy with the old system because I know it so well. Being positive, being able to scan receipts instead of typing the description, price, VAT content etc. I can do my accounts on any computer, and if I wish, scan the receipts at the point I get them - as in the shops? I'm hoping that in practice it takes me no longer to do the basic things, not longer - which will annoy me. I'm going to set up the bank link, but what worries me is that I use my business account to pay for everyday stuff - so my drawings are never £x a week or month, they include Tesco visits, and all kinds of personal stuff based on the fact that any non-business purchase is what I'm taking out of the business. I suppose I'll have to set up some category that allows me to account for this? I'm kind of resigned to have to pay monthly to submit my VAT returns, but hopefully I'll get some features to make dealing with things easier - the idea of it sending reminders for unpaid invoices being one. I like the idea that when a bank electronic is received, it tries to match it to outstanding invoices, clearing them. I like the idea that scanning receipts and then throwing the paper away is acceptable to HMRC, and I like the idea that there's an ap for my phone and I can, if necessary create an invoice while I'm away from base.

I don't like trusting the cloud. I have to use it, but only this week I lost access for a while because I was out of cell phone coverage and no wifi available. I don't know yet if there is a manual backup facility - I hope so, but I'm concerned that if I wish to use different software in the future, if I cancel the subscription, I lose ALL my stored data? I've got to sort this - even downloadable spreadsheet format would do at a push - but am I starting something that when I retire, in a few years, I have to keep going with no entries just to have the data available for HMRC for as many years as they require. I've never been paper based, and like computers. I don't like data entry, and I don't trust computers - doing very frequent backups. A good friend had never even heard of the VAT digital change, and he cannot get on with computers. He has no choice in the next year, although he believes his accountant will simply enter the info from his paperwork system onto 'something', and then they will submit his returns for him - he doesn't care how as long as it's not him!

 

[Mr D]

I wouldn't get too excited over MTD. Our accountants are a big company with a few hundred employees and they are yet to give us clear guide lines on MTD as they can't get any sense out of HMRC.

As far as we are concerned, MTD is a bridge we shall cross, but only if and when we reach the river. This government and its accompanying civil service seem to be making such a complete hash of everything they touch, that I for one have ceased to take any pronouncement they make seriously.

Government discuss laws and vote on legislation. The minister will be involved in policy making but not often deciding big policies alone.
Civil servants will write the details and produce the internal guidance for other civil servants. Not always getting things in the same universe as the legislation.

No matter which parties are in power the civil servants doing much of the work and being involved in policies (think Humphrey and co from Yes Minister) will often be the same.

 

[Alyson Dyer]

I use Xero and it has changed my life!
I log on to my computer in the morning and over my first cup of tea I deal with all the transactions that have appeared directly from the bank accounts.
VAT then consists of checking that there is not something stupid, usually caused be a fat finger, and pressing the button.
Much easier than our previous method.

 

[Newchodge]

I'll set up a meeting with my accountant for some set up advice and to check he is ok with Sage.

If you are not used to computer based systems I would avoid Sage. It is not user friendly, it complicates things that don't need complicating and it is expensive.

Have a look at Quickfile

 

[markWML]

Thank's Nicola, its reassuring to hear a similar answer to NicoJ's reply. Although I am a fully paid up Norton security user, the online banking was a concern for me. mainly because I do not use the latest & greatest PC.

I think I'm shying away from the Sage Accounting Start at £6 per month, comments about it not being user friendly are putting me off it. I'll take a look at Quickfile.

Fortunately, I only have a few transactions each quarter (maybe 50-60 or so) and I am a one man-band, so much less of a problem compared to others on here. But predominantly an equipment sales company, this is a real distraction. Especially as I am an old pen & pad dinosaur!!!

One question, which programme is proving to be the simplest to use, any recommendations?

Thank you for all the replies.

 

[johndon68]

If you are not used to computer based systems I would avoid Sage. It is not user friendly, it complicates things that don't need complicating and it is expensive.

I'd not disagree if you are talking about Sage's desktop products but, out of curiosity, have you tried SageOne - certainly not expensive compared to other cloud based solutions and, so far as I can tell, at least as easy to use as the likes of Xero...

John

 

[johndon68]

One question, which programme is proving to be the simplest to use, any recommendations?

As you'll have seen from the different packages that have already been mentioned in the thread, there is no such programme, everyone has their favourites.

For example, I find Sage's desktop product very simple to use but then I've been using it for 20 years and can use it much faster than, for example, Xero but then I've only been using Xero for about a year...

John

 

[Newchodge]

I'd not disagree if you are talking about Sage's desktop products but, out of curiosity, have you tried SageOne - certainly not expensive compared to other cloud based solutions and, so far as I can tell, at least as easy to use as the likes of Xero...

John

I have no reason to do so, I have a programme that I like.

 

[johndon68]

I have no reason to do so, I have a programme that I like.

Yet you told the OP who had only mentioned SageOne to avoid Sage as it is not user friendly and expensive yet you have no experience of the Sage software that the OP was looking at...

John

 

[Newchodge]

Yet you told the OP who had only mentioned SageOne to avoid Sage as it is not user friendly and expensive yet you have no experience of the Sage software that the OP was looking at...

John

No but I have previous experience of Sage as a company and they way they treat their ustomers. The OP had not mentioned SageOne - that is your interpretation.

 

[NicoJ]

Not to add to the debate about SAGE - an ongoing argument where you either love them or hate them it seems! - I agree with the Quickfile suggestion simply because it's free.

If you decide that you want to try something different or your accountant prefers a different software that they can work with (and probably get a discount for) then you've not lost anything. You'll probably have gained some experience of the online bookkeeping softwares as well.

 

[Deleted member 315707]

I have no reason to do so, I have a programme that I like.

I would really recommend against Sage Business Cloud Accounting or Accounting Start. It's really hard to correct mistakes. Both Xero and QuickBooks Online are easier to use for a non accountant.

 

[commadus]

So where do LTD companies stand who are under the VAT Threshold but are VAT registered. How will they submit their returns?

Will the online portal still be active on 1 April 2019 or will they be forced into MTD?

 

[Scalloway]

As far as I am aware you can continue as present if your turnover is below the VAT Threshold.

 

[paulears]

My accountant thinks the advice on this is a bit ambiguous. After all, until you submit the return and enter the figures manually, HMRC don't know you are under the threshold do they? If you enter the figure in the box it's unlikely at that point it stops and says STOP - you are over the threshold and must have used the approved software for the past three months and submit this return electronically? That just can't work. I suppose they could enable the old system on a case by case basis looking at last years returns, and making a guess, but that would entail extra work which they don't have the staff for. As so many people simply are unaware of it anyway, maybe initial reporting electronically will be just for people who know, and have started the new systems - leaving the in the dark ones able to carry on until somebody notices. I've had nothing through the post on this change whatsoever. It will be interesting to see if logging in in the new year produces any warnings about the change? I somehow expect it won't!

 

[numbersrule]

Post? What's that? I don't receive paper bills any more as everybody seems to be sending them by email. But even email will be out of date soon as the way it's heading looks like all invoices will be sent direct between universally compatible interlinked cloud based software packages. HMRC are sending emails most of the time, but to be true there is still the odd letter now and then.

 

[urstop]

If you maintain your VAT workings in spreadsheet you can try out accountsdesk MTD service.
https://accountsdesk.co.uk/docs/mtd/connect-to-hmrc. Apparently its a free service for the first year.

I have tired their demo and works well with spreadsheets. They also have integration with Google spreadsheets if preferred instead of uploading spreadsheets to the portal. Need to message them for this.

Demo details are here - https://accountsdesk.co.uk/mtd/demo

I think users try the demo and can cause issue if you are trying at the same time , so better to register and then use the demo credentials at HMRC.