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Making Tax Digital (MTD)

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

MTD has now become mandatory for VAT. Businesses with a turnover above the VAT threshold (currently £85,000) are required to keep their records digitally.

If your turnover is below the VAT threshold you are automatically exempt from MTD, however HMRC is encouraging such businesses to sign up for MTD anyway. Our advice is that you shouldn't sign up to MTD Voluntarily.

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 or Accountedge user?

Here are some of our recent Newsletter articles about MTD.

April 2019 - MTD - Impact for Businesses below VAT Threshold

December 2018 - MTD Delayed for some including those on Annual Accounting

June 2018 - MTD our solution

November 2017 - How will MTD affect AccountEdge/ MYOB Users

The legislation does not prevent Accountedge users from keeping their records in the software they like.. We have examined the options for our continuing MYOB and Acclivity users. There are three potential routes.

  1. Users can approach their existing accountant to make filings on their behalf.
  2. Mamut offers a Mac solution. Mamut will not offer a PC version. This would then be the comprehensive solution that we hope for. Simple Accounting will support Mac clients wishing to transfer to Mamut.
  3. 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 you to send a VAT report in every quarter (or every year if you are on VAT Annual Accounting). 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 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. And this assumes your bookkeeping is perfect anyway.

It would be better if the HMRC simply relax their intention to close the VAT return webpage for all smaller businesses (eg those under £1.4m annual turnover). We suggest that you write to your MP at https://www.writetothem.com/.

Next Step:

Please contact us if you need further advice.

Ask an MYOB accountant

Call us now on 01422 847500

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