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Making Tax Digital (MTD)

The government has confirmed new VAT regulations for Making Tax Digital (MTD).

MTD will become mandatory in April 2019, but initially just for VAT. From that date, businesses with a turnover above the VAT threshold (currently £85,000) will be required to send extra quarterly reports to show that they are keeping digital records for VAT purposes.

You may have heard about MTD. You may have heard software sellers telling you that your business software needs to be MTD compliant. What does this mean? Is this a threat to your business as an MYOB/Accountedge user?

Here are some of our recent Newsletter articles about MTD:

June 2018 - MTD our solution

November 2017 - How will MTD affect AccountEdge/ MYOB Users

The legislation will not prevent Accountedge users from keeping their records in the software they like. There will not be an approved list of software. However there will be complications for MYOB users. The regulations allow submissions from a bookkeeping software to a VAT filing software which itself will make the filing to the HMRC. We have examined other options for our continuing MYOB and Acclivity users. We expect to be able to provide a solution. There are five potential routes.

  1. Users could approach their existing accountant to make filings on their behalf.
  2. Mamut could offer a solution. We want to encourage Priority (the new owners of Acclivity) Mamut to offer a PC version. This would then be the comprehensive solution that we hope for. If they don' t, as a commercial software seller, they are likely to face considerable trouble selling their software in the UK. Simple Accounting will then support its clients to transfer to Mamut.
  3. Another option is for UK users to contract with the online Accountedge subscription. Simple Accounting would then login to its clients databases and make the filings quarterly for them.
  4. Simple Accounting could use the current functionality of its MYOB User Group website to take downloads of the key VAT report from its members each quarter. It could then file this on the members behalf each quarter.
  5. The final option is that Simple Accounting uses the current method that supports its own clients through our Dropbox file sharing. We would either enter a copy of your database or get each client to send a report in every quarter. The totals on the report would be uploaded into a VAT return submission software.

Now all this must strike you as a pain. Overall accountants generally do not like MTD because it will create lots of red tape. It will waste your time and ours. The latest HMRC plan is to remove the HMRC government gateway portal VAT return webpage from those clients and accountants use to submit VAT returns. Instead of maintaining a system that works well the HMRC is demanding that we use software to submit extra return electronically. That would then allow HMRC to try and devise new fines for non compliance.

But it is very complex to submit an accurate VAT return direct from bookkeeping software. Complications include flat rate scheme, bad debt relief, partial exemption, reverse charge, place of supply differences, EC sales list, back claims, unusual vat rates, mixed supply, capital goods scheme, agency vat, error correction, VAT on stock imports and duty, etc. Usually these make it impossible to fully underpin a VAT return from bookkeeping software without manual amendment.

It would be better if the HMRC would simply relax their intention to shut down the VAT return webpage. We suggest that you write to your MP at https://www.writetothem.com/

Do not forget. You currently use digital record-keeping software to keep your business records - we all expect the HMRC to make it easy for us to pay our VAT, not place obstacles in our way.

Next Step:

Please contact us if you need further advice.

Ask an MYOB accountant

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