Our website uses cookies to enhance the visitor experience (what's a cookieCookies are small text files that are stored on your computer when you visit a website. They are mainly used as a way of improving the website functionalities or to provide more advanced statistical data.). Are you happy for us to use cookies during your visits?
Please note: continuing without making a choice equates to giving us your consent, which you can withdraw at any time via our cookies policy page.


Making Tax Digital

The government has confirmed plans to publish and consult on draft VAT regulations for Making Tax Digital (MTD), with the aim to have the regulations in place by April 2018.

In July 2017 the Government announced that MTD is being delayed. MTD will be not be mandatory until April 2019, and then only for VAT. From that date, businesses with a turnover above the VAT threshold (currently £85,000) will be required to keep 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?

The legislation will not prevent MYOB and Acclivity 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 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. If they don' t, as a commercial software seller, they are likely to face considerable trouble selling the software in the UK. Simple Accounting would support its clients to transfer to Mamut. However Mamut would be unlikely to offer a PC software. This route is not the comprehensive solution that we hope for.
  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 Usergroup 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 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. There is significant opposition among accountants to the Making Tax Digital program. Overall we generally do not like Making Tax Digital 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 that 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 the return electronically.

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, agency vat, error correction, VAT on stock imports and duty, etc. 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. There is a consultation paper issued by the HMRC on which they are taking comments at present.

The consultation is still running. So I suggest that you write to your MP at https://www.writetothem.com/ and the HMRC at makingtaxdigital.consultations@hmrc.gsi.gov.uk before 10th November 2017

Here is a model response:

I am writing to respond to the consultation on Making Tax Digital for VAT. I wish to oppose the regulations given at:

https://www.gov.uk/government/consultations/making-tax-digital-reforms-affecting-businesses/making-tax-digital-for-vat-legislation-overview#annex1.

The HMRC regulations are intended allow it to withdraw the HMRC Government gateway VAT portal for VAT return submission. This portal is how my company currently submits its vat returns. My business is an XYZ business and we employ X people. My business uses MYOB/Accountedge software to keep our records digitally. We use this software for business management, cash control and invoicing reasons. The software also produces our VAT return information.

It is unreasonable is to expect our software to link directly to the HMRC via an API. This would require us to shift software. There would be a variety of unreasonable costs to doing this.

There is a concession which is itself unreasonable. If our digital bookkeeping does not link directly to the API the HMRC expect us to use a second piece of software that does link to the HMRC's API to submit the VAT MTD submissions. This is not reasonable because it would require quarterly transfer of data to a second piece of software. Red tape.

My company is entitled to use VAT annual accounting. We do not need to submit quarterly as the new regulations require, for us to determine our liability. You are wasting our time by forcing us to make these submissions - particularly as you are doing this merely as a way of confirming that we are using digital recordkeeping; which we are.

The MTD idea is flawed. It claims that there is some advantage to my business, the taxpayer, to file data more frequently. There is none. We do not want or need to submit data to the HMRC more frequently in order to fulfil our obligations. We do not want to have to use separate software to complete this unnecessary red tape. I demand that the HMRC removes the compulsion inside these regulations and reverses its threat to remove the VAT return webpage. We intend to continue to use the digital record-keeping software on which my business depends - we 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

Call us on 01422 847500Call us now on 01422 847500


Sign up for our newsletter

cima