I've just started a role with a letting agents and am reviewing the processes put in place by the previous bookkeeper. I have read the guidance (https://www.gov.uk/government/publications/vat-notice-70022-making-tax-digital-for-vat/vat-notice-70022-making-tax-digital-for-vat) but still feel completely bamboozled.
They use a third party piece of software (AgentOS, formally LetMC) to manage all the client money transactions of rent coming in, payment of disbursements to suppliers. deducting their commission and forwarding the remaining amount to the landlords. I am not involved in this process.
When the rent is collected, AgentOS calculates the amount of commission and any fees due from tenants, and this amount is then transferred from the client money account, to the 'office' account as a lump sum. As most rent is paid on the 1st of the month, there is usually one large deposit to the office account for the majority of their fees, and then maybe 4 or 5 other smaller deposits throughout the month. When each deposit is made to the bank account, they generate an excel report that details all the property transactions that make up the total.
The outgoing bookkeeper, would then summarise this report to group income by 'category' (for example, commission, application fees, inventory fees, relet fees) etc. and then manually create one invoice in the accounting software for the total, listing each category as a line item. There is no digital link between the software that calculates the commission and fees due, and the accounting software. However, once in the accounting software (where the VAT element is calculated), it is then part of the digital link to HMRC.
I would be very grateful if someone could confirm if this is compliant? On the one hand I feel that it is no different to all the other manual invoices that are generated within the software itself for the other services they provide, and in some respects is like entering totals from a cash register which has a manual link as shown in the 'System Process Map' examples in the HMRC link above. I then read the guidance again, and think that perhaps it's not sufficient as I'm in effect copy and pasting data from a spreadsheet which is not compliant.
Although the format of the download provided by AgentOS is in CSV format, it cannot be simply 'uploaded' to the accounting software without completely manipulating the data in such a way that it fits into the 'upload invoice' format required, which then seems to defeat the point of digital links.
Am I just completely overthinking this?
Many thanks for any help!