Paying VAT using MTD software : FreeAgent

Discussion in 'Accounts & Finance' started by Justin Smith, May 22, 2019.

  1. Justin Smith

    Justin Smith UKBF Enthusiast Full Member

    568 59
    I have always done all my accounts and invoices on paper, in fact I`ve already worked out how much VAT I owe for April, though I actually pay quarterly.
    I signed up for FreeAgent, but the problem is I have been told I cannot proceed with putting all the figures into the MTD software because it needs the opening balances from the last financial year and I won`t have those till I`ve done my books for last year. Is this correct ? And would the situation be the same with any similar software ? The problem is I really haven`t got time to do my books for last year at the moment....... What have the figures from my balance sheet got to do with VAT anyway ? ! ? And technically I didn`t think I even needed a balance sheet for the turnover my business achieves !
    Once I`ve managed to put in the opening balances is it just a matter of putting all the figures in to the FreeAgent (from my paper books) and it will tell me (and send the HMRC) the amount of VAT I owe ?
     
    Posted: May 22, 2019 By: Justin Smith Member since: Jun 6, 2012
    #1
  2. UK Contractor Accountant

    UK Contractor Accountant UKBF Big Shot Full Member - Verified Business

    4,621 770
  3. John Hemming

    John Hemming UKBF Regular Full Member

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    I don't know about Freeagent, but there are according to HMRC 11 different free bridging systems that can be used to convert from spreadsheets etc to MTD.
     
    Posted: May 23, 2019 By: John Hemming Member since: May 23, 2019
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  4. Justin Smith

    Justin Smith UKBF Enthusiast Full Member

    568 59
    That`s only of help if one already does ones accounts on a spreadsheet. I do mine in the redoubtable Guildhall Headliner.
     
    Posted: May 24, 2019 By: Justin Smith Member since: Jun 6, 2012
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  5. John Hemming

    John Hemming UKBF Regular Full Member

    135 17
    If you do manual collins books or headliner books your best option is probably a cloud cashbook (not cloud accounting). There is one.
     
    Posted: May 25, 2019 By: John Hemming Member since: May 23, 2019
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  6. Justin Smith

    Justin Smith UKBF Enthusiast Full Member

    568 59
    Thanks for that, is that one of HMRC`s compatible products ?
     
    Posted: Jun 1, 2019 By: Justin Smith Member since: Jun 6, 2012
    #6
  7. John Hemming

    John Hemming UKBF Regular Full Member

    135 17
    Yes.

    This is HMRC's search engine
    https://www.tax.service.gov.uk/making-tax-digital-software

    Best to type in my company name (Cirrostratus) and you will see it links to my website.

    This week HMRC agreed that for 2019 people can type in just two lines the inputs and outputs (if they are short of time). It is better to keep a full transactional cashbook. That assumes that you have relatively few transactions in a period (I assume quarter).

    It is really designed for microbusinesses (and preferably sole traders or partnerships - although I am working on FRS102 and other FRC standards.
     
    Posted: Jun 1, 2019 By: John Hemming Member since: May 23, 2019
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  8. Justin Smith

    Justin Smith UKBF Enthusiast Full Member

    568 59
    Thanks John.

    How simple would it be for me to use that software bearing in mind that my books (that`s VAT and the years accounts) are done exclusively on paper in the Headliner book ?

    Also you seem to be implying things might change from 2020 onwards is that correct ?

    Lastly, and this may not be something you know, I`ve already set up FreeAgent to with HMRC, would it be possible to change it to your system ?
     
    Posted: Jun 3, 2019 By: Justin Smith Member since: Jun 6, 2012
    #8
  9. John Hemming

    John Hemming UKBF Regular Full Member

    135 17
    It should take a few minutes to transfer across (which can be done quite easily and in fact you can have more than one system authorised so you could have freeagent and mind authorised, but obviously only one vat return can be submitted.)

    The change in 2020 is that Digital Links are required from 1st April 2020.

    My recommendation is to try it out and see what you think. That should not take long and won't involve any charges.
     
    Posted: Jun 3, 2019 By: John Hemming Member since: May 23, 2019
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  10. Justin Smith

    Justin Smith UKBF Enthusiast Full Member

    568 59
    Thanks for that John.

    What does the bit in bold actually mean ?
    What I don`t want to do is start using a system and then have to relearn a new system next year !

    BTW, is there any phone support for the system ?
     
    Posted: Jun 3, 2019 By: Justin Smith Member since: Jun 6, 2012
    #10
  11. John Hemming

    John Hemming UKBF Regular Full Member

    135 17
    Digital Links are a legal requirement from 1st April 2020. The link below explains how to do them. You will have problems with totally manual records because you need to start with digital records. MTD is two things
    a) MTD compatible software and
    b) Digital Records
    This talks about digital links
    https://www.vat.direct/workflow/w/standardform/DigitalLinks

    We do phone support, but not by people randomly phoning up. Instead calls are scheduled.
     
    Posted: Jun 3, 2019 By: John Hemming Member since: May 23, 2019
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  12. Justin Smith

    Justin Smith UKBF Enthusiast Full Member

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    So will your software be compatible with the 2020 requirements ? If not what will be required ?
     
    Posted: Jun 3, 2019 By: Justin Smith Member since: Jun 6, 2012
    #12
  13. John Hemming

    John Hemming UKBF Regular Full Member

    135 17
    Yes my software is compatible with the 2020 requirements. The point I am making is that although you would be allowed to type in a summary for the moment in 2020 you are supposed to have basic electronic records. That does not prevent you keeping manual handwritten records, but additionally you will have to have some detail in an electronic form. Exactly what details depends subsantially on what business reccords you have any who you trade with.

    For example if you are a shop selling to the public you probably can only have to record the daily gross takings, but if most of your transactions are invoices on a B2B basis then you will need to list the invoices. Similarly if you have regular suppliers and pay for more than one invoice at a time you can record just the payments.
     
    Posted: Jun 3, 2019 By: John Hemming Member since: May 23, 2019
    #13
  14. Justin Smith

    Justin Smith UKBF Enthusiast Full Member

    568 59
    Gordon Bennet, this MTD gets worse and worse. Our invoices are on paper, most are to none businesses. What are these sociopaths at the HMRC expecting ? ! ?
     
    Posted: Jun 3, 2019 By: Justin Smith Member since: Jun 6, 2012
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  15. consultant

    consultant Your Business Community Staff Member

    5,436 751
    Posted: Jun 3, 2019 By: consultant Member since: Jan 21, 2008
    #15
  16. John Hemming

    John Hemming UKBF Regular Full Member

    135 17
    The law doesn't change whatever software you use.
     
    Posted: Jun 3, 2019 By: John Hemming Member since: May 23, 2019
    #16
  17. justintime

    justintime UKBF Regular Free Member

    516 69
    I haven't seen anything on this John I thought you had to keep digital records from the first VAT quarter starting April onwards, although a light handed approach from HMRC with no penalties for the first year. Do you have a link please?
     
    Posted: Jun 5, 2019 By: justintime Member since: Apr 12, 2009
    #17
  18. John Hemming

    John Hemming UKBF Regular Full Member

    135 17
    I had an email conversation with HMRC about this.
     
    Posted: Jun 5, 2019 By: John Hemming Member since: May 23, 2019
    #18
  19. justintime

    justintime UKBF Regular Free Member

    516 69
    I would advise readers to stick to the current MTD policy unless told specifically by HMRC they can prepare manually and just stick the totals in a spreadsheet/software, and even then ask for a reference number for the call/email, or HMRC announce a change of policy,

    How things looking John? I'm waiting until middle of July before moving my clients over to MTD, but I'm guessing this next month the system will feel the most strain.
     
    Posted: Jun 5, 2019 By: justintime Member since: Apr 12, 2009
    #19
  20. UK Contractor Accountant

    UK Contractor Accountant UKBF Big Shot Full Member - Verified Business

    4,621 770
    VAT Notice 700/22


    4.2 .1.1 Soft landing regarding digital links requirements

    HMRC will allow a period of time, the “soft landing period”, for businesses to have in place digital links between all parts of their functional compatible software.

    For the first year of mandation businesses will not be required to have digital links between software programs.

    This means that if Making Tax Digital rules first apply to you from a:

    • VAT period starting on or after 1 April 2019 - you will have until your first VAT return period starting on or after 1 April 2020 to put digital links in place
    • VAT period starting on or after 1 October 2019 - you will have until your first VAT return period starting on or after 1 October 2020 to put digital links in place
    During the soft landing period only, where a digital link has not been established between software programs, HMRC will accept the use of ‘cut and paste’ or ‘copy and paste’ as being a digital link for these VAT periods.

    The following rule has the force of law:

    A digital link is an electronic or digital transfer, or exchange of data, between software programs, products or applications.

    The use of ‘cut and paste’ or ‘copy and paste’ does not constitute a digital link - except during the soft landing period as set out in paragraph 3 of the next ‘force of law’.

    Heres the 'DIGITAL LINK';) - https://www.gov.uk/government/publi...ng-tax-digital-for-vat#digital-record-keeping
     
    Posted: Jun 5, 2019 By: UK Contractor Accountant Member since: Sep 18, 2013
    #20