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Can you just submit totals for VAT for MTD?

Can you just submit totals for VAT for MTD?

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Client uses an old version of sage to record all trasnactions. However the version they are using is too old and to upgrade they will need to sign up to an expensive monthly subscription. They want to carry on using the old sage but buy a basic xero subscription (cheaper) to submit the VAT returns by just entering the box totals using the adjustment feature on the vat return. Can they do this? I cant recall what HMRC need to recive for MTD?

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By the_drookit_dug
07th Jun 2021 00:19

There would need to be a digital link between Sage and Xero.

Why pay for Xero though? There are free MTD enabled alternatives. Better still, convince the client to get real and ditch their old Sage version for a newer version.

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Replying to the_drookit_dug:
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By Emma31042
07th Jun 2021 00:30

Thanks for your reply. I completely agree that he should his version of Sage, particularly as he's so adamant he wants to continue to use Sage. I just think the quote of £132p/m seems so much higher than other software so he really needs to just make a decision.

And to answer you question, no there wouldn't be a digital link between the two, it would just be entering the figures in the box.

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Replying to Emma31042:
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By the_drookit_dug
07th Jun 2021 00:43

Keying the summary figures into Xero would not be MTD compliant, however exporting the figures from Sage to Excel/CSV and importing them into Xero would be MTD compliant.

Madness, I know, but them's the rules.

Thanks (5)
Replying to the_drookit_dug:
By ireallyshouldknowthisbut
07th Jun 2021 11:18

the_drookit_dug wrote:

Keying the summary figures into Xero would not be MTD compliant, however exporting the figures from Sage to Excel/CSV and importing them into Xero would be MTD compliant.

Madness, I know, but them's the rules.

Can I just correct that for you

"In the exceedingly unlikely event they ask, tell HMRC you are exporting the figures from Sage to Excel/CSV and importing them into Xero [or more usefully something cheaper and simpler] so as to be MTD compliant, but in reality HMRC don't have the slightest idea, or quite frankly slightest interest in how you get there so long as you pay the right amount of VAT. That is the commercial reality."

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Replying to ireallyshouldknowthisbut:
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By the_drookit_dug
07th Jun 2021 11:22

Haha, the thought did occur to me. Just be extra careful keying in those figures - could be tricky trying to explain a transposition error...

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Replying to the_drookit_dug:
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By Hugo Fair
07th Jun 2021 11:56

HMRC may be dumb (as is the concept of expecting them to audit the use of bridging software without resource intensive visits) ... but they can easily (and automatically) tell what software actually made the submission.
So Ireally...'s suggestion (to "tell HMRC you are exporting the figures from Sage to Excel/CSV and importing them into Xero [or more usefully something cheaper and simpler] so as to be MTD compliant") will only work if the software used for submission is MTD compliant.
Short-circuiting the process by typing values into a spreadsheet that your chosen submission software then imports is, however ludicrously, absolutely fine!

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Replying to Hugo Fair:
By ireallyshouldknowthisbut
07th Jun 2021 14:01

@hugo, clearly the software to file will be compliant.

The bit HMRC have not a faintest idea - or indeed interest (why would they?) is how you get the numbers into it.

The only thing you have to remember is how you are *supposed* to do it, in the unlikely event HMRC ask about it so you give them the correct response.

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Replying to ireallyshouldknowthisbut:
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By Hugo Fair
07th Jun 2021 14:41

As usual, a clearer (if blunter) version of what I was trying to say.
Just keep practicing the phrase "I use bridging software for that. Now where did I last see it, I keep putting it down somewhere and losing it"!

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By Hugo Fair
07th Jun 2021 01:13

All that MTD for VAT requires is:
1. the figures for the VAT return (in the correct boxes) within whatever software your client uses to submit his return; and
2. the ability to show (if so requested) that those figures did not get there by being typed in direct.

They may have got there by your client using MTD compliant software for recording the source data (which goes on to populate the boxes for you and then to submit the return); OR by 'digital' (aka non-human) transfer of the data from some other source of records - known as 'bridging' - as per example mentioned by the drookit dug.

[On the other hand that is only the current state of play ... it will probably get worse for VAT, and will certainly be much more work/expensive when MTD for IT rolls up].

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By SXGuy
07th Jun 2021 07:36

Adjustments are not allowed under mtd.

The whole point of digital record keeping is having a digital link between data and submission. An adjustment won't have that.

You should know this.

And £132 pm for sage? Come on now, I could name one software that would cost him £20 pm.
He might be adamant, but that is irrelevant.

I might be adamant I want a 2 week holiday to Portugal this year, doesn't mean I'll get it.

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By paulwakefield1
07th Jun 2021 08:43

If your client wants to stick with Sage, just use one of the free MTD upload packages to submit or, for a small cost, VT. If they're happy using Sage and it works for them, stick wth it on the "If it ain't broke, don't fix it" principle. An old version of Sage is a darn sight cheaper than a new version or any other subscription software.

Whilst most of my clients are on Xero or VT, I have one on an old version of Sage and MTD submission simply hasn't been a big issue. They use a package developed by one of the regulars on here. Download a csv and upload and job done.

If you use the VT option, they might be persuded to switch to what I still think is some of the best small accounting software around as long as fx and the need for an audit trail* are not requirements. *depends how much you trust the capabilities of your client.

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By sallycox
07th Jun 2021 10:36

If the client wants to stay with Sage why not convert to Sage Business Cloud. We did this & it now costs less than £30 per month instead of nearly £200 per month.

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By sallycox
07th Jun 2021 10:36

If the client wants to stay with Sage why not convert to Sage Business Cloud. We did this & it now costs less than £30 per month instead of nearly £200 per month.

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By Duggimon
07th Jun 2021 11:05

It depends what you mean by "can". It will work and HMRC will not have any information they can use to detect whether the process has been correctly followed, so in that respect your client can indeed do this. It's definitely not compliant with the rules.

I would agree with the other respondents though, the minimal disruption method is to use bridging software to file from an Excel spreadsheet. It's faster, easier and cheaper, as well as being permitted by the rules, better in every way than your client's proposed solution. Just export the detailed VAT report from sage and link up the figures to the respective boxes.

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Replying to Duggimon:
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By Emma31042
07th Jun 2021 14:32

Thank you for your help.

So the next question is, what's the easiest bridging software to use?

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Replying to Emma31042:
By Duggimon
07th Jun 2021 14:41

Well we use IRIS for ours because the licence came free with the suite of accountancy software we already get from them.

I have also used https://easymtdvat.com/ which seems decent and is very cheap, I believe there are free options out there as well but couldn't really speak to what the best one might be.

They are all performing a very simple task though, I would imagine so long as it's functional it doesn't matter which one you use.

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Replying to Emma31042:
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By CallumPlum
07th Jun 2021 16:31

In my experience BTCHub is the easiest one to use. I use it mainly for Excel.

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Replying to Emma31042:
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By jantill
08th Jun 2021 23:42

Tax Optimiser is £30 per year for a business (free for the first year), compliant and fairly straightforward to use.
It imports an excel spreadsheet and then does its thing.

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By JacquiMBurns
07th Jun 2021 13:40

For clients I do on excel, as I don't prepare full accounts, I enter the VAT onto Sage via 1 sales invoice & 1 purchase invoice & then submit under MTD. When one had a VAT Compliance check they asked for the VAT Report in Excel format anyway, so there was no problem. I have set up the Excel so it formats through to a VAT return so I am sure all my figures are included. Not had a problem yet.

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Replying to JacquiMBurns:
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By JacquiMBurns
08th Jun 2021 17:23

Previously, we have used Absolute Bridging software & set up each Excel workbook individually to feed through to one of their import worksheets which you could then link & submit to HMRC. Worked fine until a new employee, despite being told otherwise, did everything on Excel & used up all the licences whereas my colleague & I had calculated how many we would need for the next few years as most clients are put on Sage, Xero, Quickbooks or Clearbooks.

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By Dr Fauci
10th Jun 2021 10:17

Why buy Xero subscription? Bokio does this for you for free.

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123 Sheets
By 123Sheets
10th Jun 2021 10:25

You just need bridging software.

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By Leywood
10th Jun 2021 10:37

Sage fully paid for, no monthly fee. No need to incur new monthly fee.

Sage not broken. So no need to fix it.

Just export data, easy in Sage, even in the oldest of their programs, drop into bridging software. Plenty free or relatively low cost. Easy peasy, job done.

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OG
By Catherine-Xero
14th Jun 2021 21:16

@Emma31042 It's possible to export the data from Sage and use the bridging tool in Xero to submit your client's MTD VAT returns. The only information you will need to import into Xero will be the VAT box amounts from your exported data from Sage.
However, since 1 April 2021, you must make sure this information is transferred by digital links. You can still use formulas but the cut and paste function is not accepted by HMRC as a digital link.

There are a few examples where manual posting is permitted and this can be found at https://www.gov.uk/government/publications/vat-notice-70022-making-tax-d... along with some examples of what HMRC considers to be a digital link.

If you could come through to our support team they can clarify further > https://central.xero.com/s/contact-support

We're also running a free webinar for accountants and bookkeepers on the topic of Digital Links and Wave 2 of MTD for VAT on 22 June 2021 at 2pm. If you're interested in joining please register at https://xero.zoom.us/webinar/register/WN_oXeZYV9xSwG1wuKD_Gd-DQ

Thanks, hope this helps.

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OG
By Catherine-Xero
14th Jun 2021 21:16

@Emma31042 It's possible to export the data from Sage and use the bridging tool in Xero to submit your client's MTD VAT returns. The only information you will need to import into Xero will be the VAT box amounts from your exported data from Sage.
However, since 1 April 2021, you must make sure this information is transferred by digital links. You can still use formulas but the cut and paste function is not accepted by HMRC as a digital link.

There are a few examples where manual posting is permitted and this can be found at https://www.gov.uk/government/publications/vat-notice-70022-making-tax-d... along with some examples of what HMRC considers to be a digital link.

If you could come through to our support team they can clarify further > https://central.xero.com/s/contact-support

We're also running a free webinar for accountants and bookkeepers on the topic of Digital Links and Wave 2 of MTD for VAT on 22 June 2021 at 2pm. If you're interested in joining please register at https://xero.zoom.us/webinar/register/WN_oXeZYV9xSwG1wuKD_Gd-DQ

Thanks, hope this helps.

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Morph
By kevinringer
20th Jun 2021 14:46

MTD requires a digital link between the data and the submission to HMRC. You are not permitted to input the Sage totals direct into MTD software. Having said that, I'm sure there are plenty of people who are doing just that. The only data that is sent to HMRC are the 9 boxes from the VAT return, together with the VAT registration number, business name, period start and end dates. So HMRC have no idea whether there is a digital link, or even if the records are manual.

There's plenty of bridging software available, some of which is free. Your client can export their VAT return from Sage as a CSV, then use bridging software to link to the CSV and transmit to HMRC. Or your client can email the CSV to you and you use your bridging software. I have several clients who email their spreadsheets to me and I use our bridging software to file. We charge a fee per filing. We use Absolute but in addition to having to pay for it, it needs Excel 2010 or newer. So no good if your client (or you) uses something else such as Open Office.

Finally, we have loads of clients who use Sage desktop and typically pay about £24 a month. We got our clients to upgrade through our Sage account manager.

The easiest option is to upgrade Sage because it is easier to efile through Sage than to export to CSV and link to bridging software (some clients have really struggled linking). The cheapest option is to retain the existing Sage and use one of the free bridging products. They're listed at https://www.gov.uk/guidance/find-software-thats-compatible-with-making-t.... Personally, I would not change to another software product (Xero, QuickBooks etc) just for MTD, I'd only change if there were other functions that would be useful (eg bank feeds).

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