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Just exactly how will MTD Bridging Software work?

How will MTD Bridging Software actually work in practice?

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Despite reports that there will be bridging software available to electronically extract VAT data from spreadsheet based accounting records and then file that data directly to HMRC in an MTD for VAT compliant format, I have yet to see any definitive explanation as to how this will actually be done by the average businessperson or Accountant.

Bearing in mind that tens of thouisands of people must maintain spreadsheet accounting records in hundreds, or even thousands of different ways, and many do not even use Excel but opt for another spreadsheet formats for various reasons, I am at a loss as to how bridging software can possibly extract basic information, let alone all transactions.

In my view, it is an impossibility. We might be told that that Emperor is wearing new clothes, but we know for sure that he is actually wearing nohing, because that is what we see. I don't think we can seroiusly be expected to believe that there is magic bridging software on the way.

As perhaps the single most important software to affect the majority of businesses heading for the April 2019 deadline, I have yet to see any bridging software with a step by step description as how to use it and what it will do. Can ANYBODY describe in a way that we can all understand as to how we will be using bridging software in all conceivable circumstances in practice. We really should know quite a lot about this by now.

I don't think it is too much to ask as I am sure that there are tens of thousands of people like myself who are keen to know.

At the moment, people extract Accounting and VAT information from spreadsheets that range from very simple to very complex. There may be a variety of assocated supporting unconnected spreadsheets or Word documents, and myriad other ways of keeping accounting records.

Despite this, over a period of time, businesses will have developed ways of extracting & summarising the correct information to then type into the Government VAT Portal. There is no reason to believe that there are significant mistakes in using this type of system, indeed the human brain is exceptionally good at sorting out only the information that is required.

Show me the bridging software that can do all of this from existing spreadsheet systems with little or no change, and I will be truly impressed.

 

Replies (61)

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Hallerud at Easter
By DJKL
06th Jun 2018 14:55

I suspect/guess/surmise/make up that what one may need to do is have a pre formated excel sheet added to the workbook (extra tab) you would then need to link the appropriate cells in the remainder of the workbook (say from an ETB) to this uplift/submission sheet in some way.

Most of my retail vat reg client spreadsheets currently are multi page, so I have monthly sales sheets/ monthly purchase sheets/ quarterly bank rec sheet/ summary received sheets (12 rows)/summary purchase sheets (12 rows)/ the data gets lifted into vat return sheets re the quarters (a fair few have zero/standard apportioning re retail scheme, plus annual adjustment to do) and the summary sheets also link to an ETB .

Re YE I have creditors/accruals sheets and pre set up fixed asset sheets and a section below the ETB re year end stock calculations (most of my retailers record stoctakes at RRP, I need to adjust to cost) the whole creating the accounts.

Currently vat figures are manually typed into returns, ETB figures typed into TaxCalc re vat returns and the accounts.

Anyone got any other clues/ideas how these might work?

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By tom123
06th Jun 2018 15:14

I agree fully, Tornado.

I have company wide ERP, that gives me the 8 figures I need. Blamelessly then typed in to the portal by me.

Cannot see any upside to this development. More stages equals more scope for error.

As a 'Trader' we have been told nothing - hence if I wasn't on here I would be oblivious.

Mind you, our reputable 'small town' accountancy firm is adopting a wait and see approach, along with most of Aweb.

Like Brexit I am evisioning an extensive 'transition / implementation period.

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By Wanderer
06th Jun 2018 15:44

VTT+ has a MTD Export button in its VAT return section.

It is a simple copy to clipboard of the relevant figures:-

Business name The ABC Company Ltd
VAT registration number 123 4567 89
VAT return from date 01/01/18
VAT return to date 31/03/18
Output VAT 100000.00
EC acquisitions VAT 5000.00
Total output VAT 105000.00
Input VAT 75000.00
Net VAT due 30000.00
Total sales 500000.00
Total purchases 375000.00
Total EC sales 0.00
Total EC purchases 25000.00

Presumably these will be pasted into the MTD VAT application, then a button pressed to submit.

IF (and it's a big IF) this is the way MTDfV is implemented then all you will need to do is replicate the above in the spreadsheets.

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Replying to Wanderer:
By ireallyshouldknowthisbut
06th Jun 2018 15:54

thats pretty much what I took from the implementation document, its probably less exciting than iXBRL which these days is a "non job" so long as you file it compared to all sorts of bold announcements when it came out about what it would do and be used for.

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Replying to Wanderer:
Tornado
By Tornado
06th Jun 2018 16:03

I think there is a slight confusion at the moment about software that currently exists, which will extract VAT information from wherever and file direct to HMRC, bypassing the manual portal, and new software that will be required to file in a completely different format and which will need to be certified as MTD compliant.

In the case of VT, my understanding is that there will be new MTD compliant software available that can extract all necessary information from VT for post April 2019 VAT filing, so this was a good example, but it will not be the same software that can be used at the moment.

There are some other current bridging software offerings, but again, I believe these are for current use and only use totals and are mainly just an alternative to typing information into the HMRC VAT portal.

As far as I can see, and until someone explains it in more detail, any bridging software will have to be MTD for VAT compliant and I believe nothing like that actually exists at the moment.

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Replying to Wanderer:
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By Matrix
06th Jun 2018 16:40

VT put that button there when they were going to develop a MTD solution which they are no longer doing. I assume it is not just the summary box figures but also the underlying transactions which will have to be transferred digitally. Otherwise my clients will have to pay to export them to another package instead of just typing into HMRC which works fine.

But we don't know yet, I hope there is a soft landing for a year. In any case there are usually adjustments for reverse charge, partial exemption, corrections etc so I don't know how these would be exported. If it is just the box figures then I suppose it won't be too bad.

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Replying to Matrix:
By Tim Vane
06th Jun 2018 16:58

Matrix wrote:

I assume it is not just the summary box figures but also the underlying transactions which will have to be transferred digitally.

There is no requirement to transfer any underlying transactions - it's just the same summary info that is manually typed into the online form. The only difference will be that you can no longer type it into a form that no longer exists. So you'll instead just have to copy it to the clipboard and paste it into an MTD compliant app to post it for you. I think BTC have already built a compliant app and I know that TaxCalc, Taxfiler and most of the others are building them too, but at Accountex they seemed to be playing the same wait and see game as most accountants - they don't want to put too much money into development knowing that HMRC are likely to backtrack at any minute.

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Replying to Tim Vane:
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By Matrix
06th Jun 2018 17:10

Ok thanks. I was assuming the worst.

Has anyone thought what they will do if they purchase the bridging software and it is more cost effective to submit clients' VAT returns than for them to also purchase the software? There would have to be a fee and a disclaimer if we haven't prepared the figures ourselves. Thinking about it, it may be more cost effective for the client to just purchase the software.

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Replying to Matrix:
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By Wanderer
06th Jun 2018 17:23

Matrix wrote:

VT put that button there when they were going to develop a MTD solution which they are no longer doing.

Nope, different button. There was a 'MTD' button there originally along the top screen, which was then removed. This is a more recent one, 'MTD Export' which in in the Display > Vat Returns section.
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Replying to Wanderer:
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By MrsG
07th Jun 2018 10:58

I may be being very stupid/blind, but I can't see this button in VT. Please can you describe exactly where it is?

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Replying to MrsG:
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By Wanderer
07th Jun 2018 11:07

MrsG wrote:

I may be being very stupid/blind, but I can't see this button in VT. Please can you describe exactly where it is?


First go to Help > About and check that you are running Build 22/03/2018. If not update the program.
Then go to Display > Vat Returns.
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Replying to Wanderer:
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By MrsG
07th Jun 2018 11:33

That's great. Thank you. I was not running Build 22/03/2018 (despite having automatic updates enabled). I now have the magic button

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By blox
06th Jun 2018 18:13

Here is an example of the API message sent to HMRC, from their own documentation.
Scroll to the end and you will see it is just 8 boxes filled plus some basic info on VAT reg no, company name etc.

https://assets.publishing.service.gov.uk/government/uploads/system/uploa...

So this is just as it was said above and the implementation will probably be also as mentioned above - an extra worksheet which looks very similar to what online web form looks now, but where you feed summary figures from your other worksheet(s), one for each VAT box calculated.

To be honest, I cannot see the point of doing this rather than leaving the current online web form since it gives HMRC no additional info - all is still being sent as one figure for each of boxes on VAT return.

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Replying to blox:
By Tim Vane
06th Jun 2018 22:11

blox wrote:

Here is an example of the API message sent to HMRC, from their own documentation.

That is the existing VAT filing online Xml system. Nothing to do with MTDforVAT.

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Replying to Tim Vane:
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By blox
07th Jun 2018 11:25

Ah did not know that - got wrong impressioin when searching for API for VAT MTD. Thanks for enlightement!

In which case I am still puzzled how the new API will look like.

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By johnjenkins
07th Jun 2018 10:56

Great article which brings the problems to the fore.
If it is just totals that is going to be used in the new format, what is the point?
My understanding is that you have to digitally put the required information in compliant software or non compliant software with bridging facilities so that the MTD software can not only extract the totals but the individual transactions as well. Otherwise there would be no point in spending umpteen billions on new software to give the same info as before.

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Replying to johnjenkins:
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By jimeth
07th Jun 2018 11:38

The submission to HMRC under MTD will just be the 9 boxes. The requirement is to keep digital records and for there to be a digital link between any separate pieces of software used (no re-keying).
There are specific requirements of what data must be held about transactions, but this need not be submitted to HMRC.
If the submission is not made from the same software as is used for recording transactions then it is just the summary (9 boxes) that needs to be exported and then imported into the submission software.
Adjustments can be input into the submission software before submitting to HMRC.
There can be multiple pieces of software, if for example different divisions use different accounting systems which all export summaries to another piece of software to consolidate and submit to HMRC.

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Replying to jimeth:
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By johnjenkins
07th Jun 2018 12:02

Although it might well be that for VAT purposes only the totals need to be submitted. Surely the whole point is that the MTD compliant or bridging software has access to the individual transactions (they have to be done digitally and in a certain format). If I'm wrong then what is the point of MTD.

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Replying to johnjenkins:
Hallerud at Easter
By DJKL
07th Jun 2018 13:23

There is no point.

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By North East Accountant
07th Jun 2018 11:44

Summary initially, then HMRC will want transactions!

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Tornado
By Tornado
07th Jun 2018 12:23

It seems to me that if totals only are to be submitted for VAT purposes, then this bridging software is only a temporary measure as when MTD is brought in for everyone from 2020 or whenever, the requirement will still be to submit all transactions which will, again, not be possible by most spreadsheets users due to the myriad formats used.

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Replying to Tornado:
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By johnjenkins
07th Jun 2018 14:04

I assume that, because entries have to be made in a certain format, the HMRC software will tag (similar to ixbrl) them so that they have a record of all transactions for all business. If that is the case then it doesn't matter how the spreadsheets are formatted.

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By cbp99
07th Jun 2018 12:39

As has been said, the submission requirement is similar to now. There is also, according to the Regulations http://www.legislation.gov.uk/uksi/2018/261/contents/made a requirement to "keep and maintain" certain information in "functional compatible software". For sales: the date, value, and rate of vat, and for inputs: the date, value, and allowable input tax, in electronic format. This is what any software or spreadsheet would do now - otherwise how could it produce figures for a vat return.
The main change that I can see is a requirement to correct errors or omissions asap, instead of on the next return (or on form 652).
As a matter of interest, would scanning manual records that record the above information count as "keeping and maintaining in electronic format". If not, why not?

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By richardterhorst
07th Jun 2018 12:57

I was told by QB at Accountex that MTD for VAT thresold firms works on the basis of a backoffice app on QB which upon submitting the VAT to HMRC also, seperately, sends the data to another HMRC login with confirmation that the data is held electronically and in a secure manner and location.

I have no clue and take their word for it.

However how you equate that with keeping records in a spreadsheet format is beyond me. I doubt it would satisfy unless.

But who knows. HMRC is not exactly communication very well.

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By SteLacca
07th Jun 2018 13:34

The question is flawed, in that asking how it will work assumes that it will work in the first place. Something I have very serious reservations about assuming.

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Replying to SteLacca:
Tornado
By Tornado
07th Jun 2018 14:14

A very good point, but in posing the question, it was not on the basis that I believe it will work, I actually don't think it will work. I was hoping that there would be a step by step guide as to how the bridging software would work in practice, but so far this has not materialised.

Lots of good comments and advice though.

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Tornado
By Tornado
07th Jun 2018 14:18

THOUGHT FOR THE DAY

They say that those with good computer gaming skills are ideal as software engineers. My thoughts are that as most games are set in fantasy worlds, it seems inevitable that they will only be able to create fantasy software.

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By [email protected]
07th Jun 2018 16:38

I think the whole idea of this is going to be a big fail for a lot of people. I currently use sage on my C drive and cannot afford to upgrade to a cloud version as I only have a handful of clients to I basically help out by doing their books. I only have 1 vat client and currently calculate his vat on sage but submit manually on the HMRC site. Everyone is asking about spreadsheets, but what about all the people still using old fashioned software that is not cloud based or capable of sending electronic information. I am sure I cannot be the only one! I am absolutely dreading MTD. I am yet to find a software that is affordable for multiple companies. There are a lot of small bookkeeping agents out there.
I feel HMRC are just not prepared for all the problems.

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Replying to [email protected]:
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By Wanderer
07th Jun 2018 16:46

Sage will either push you to the cloud or charge you for an 'upgrade' to a version that will file the returns.

Either way you can be sure that it will cost you more.

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Replying to [email protected]:
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By Matrix
07th Jun 2018 17:00

A client moved from Sage to VT and is getting on well and actually prefers it now. You could download it for a trial and it would be £150 to purchase, you then pay £40 annually for transferring digitally to https://www.neilsonjamestech.co.uk/vatreturn.php. Prices before VAT.

I don't know if you would have to subscribe to VT and pay annually to use the digital button referred to earlier but you can compare this to the cost of other packages and Sage cloud etc. VT is brilliant, you won't be disappointed.

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Replying to Matrix:
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By [email protected]
07th Jun 2018 18:45

thankyou, yes I believe I will move away from sage because of the cost. I did try and download VT but it wouldnt download and kept asking for a disc, they are currently trying to sort out for me as I would like to trial it.

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Replying to Matrix:
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By cbp99
07th Jun 2018 22:20

The VT subscription for the bookkeeping package with digital button is a one-off. Only the accounts package, which obviously needs regular updating for GAAP changes, carries an annual charge.

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Replying to cbp99:
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By Matrix
07th Jun 2018 23:32

It is a one-off currently but we don't know whether there will be annual fee for using it for MTD.

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Pile of Stones
By Beach Accountancy
07th Jun 2018 18:44

However, after Brexit we will be able to get rid of the pointless boxes 2, 8 and 9. Only 5 boxes to populate :)

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Replying to Beach Accountancy:
Tornado
By Tornado
07th Jun 2018 22:43

A great point and quite logical, but who actually knows what is going to happen.?

All this mystery is sooooo exciting.

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Tornado
By Tornado
08th Jun 2018 09:59

The legislation seems to say -

"The information contained with the VAT return will be generated by pulling information from the digital records. This information will contain as a minimum the 9 boxes required for the VAT return, but can also contain a specific data set of supplementary information - all of which will be pulled from the digital records."

My original question was about how in practice the bridging software will work, and not what information it will 'pull out' from a spreadsheet, although that is of interest, of course.

There have been many good, helpful answers in this and other similar topics on AWEB, but I still do not know how this software actually works, and exactly what information it will be looking for in the 'supplementary information' section.

The truth seems to be that no one yet knows how it is all going to work in practice which is pretty disgraceful considering the short time now until April 2019.

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Replying to Tornado:
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By Wanderer
08th Jun 2018 10:27

Tornado wrote:

The legislation seems to say -

"The information contained with the VAT return will be generated by pulling information from the digital records. This information will contain as a minimum the 9 boxes required for the VAT return, but can also contain a specific data set of supplementary information - all of which will be pulled from the digital records."

The legislation says no such thing, here's what the legislation says:-
http://www.legislation.gov.uk/uksi/2018/261/contents/made
Tornado wrote:

My original question was about how in practice the bridging software will work, ...

There have been many good, helpful answers in this and other similar topics on AWEB, but I still do not know how this software actually works,

Copy from your spreadsheet & paste into one of the apps that is being developed.

Tornado wrote:
...

and exactly what information it will be looking for in the 'supplementary information' section.

'supplementary information' per the consultation doesn't appear to have made it to the legislation. The consultation did suggest that it was to be voluntary anyway.

Tornado wrote:

The truth seems to be that no one yet knows how it is all going to work in practice which is pretty disgraceful considering the short time now until April 2019.

Agreed.
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Replying to Wanderer:
Tornado
By Tornado
08th Jun 2018 10:48

Thank you for your reply

The paragraph I quoted comes from current information as shown on the HMRC website, which is why I said that the legislation seems to say ...

What you have done is neatly highlight the confusion, out-of-date and erroneous information associated with this unworkable and unnecessary project.

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Replying to Wanderer:
Tornado
By Tornado
08th Jun 2018 17:03

"Copy from your spreadsheet & paste into one of the apps that is being developed. "

A budget of £1,200 million and we end up with copy and paste.

Unbelievable.

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By Matrix
08th Jun 2018 11:03

Well the software suppliers seem to think they have all the info since I have just been invited on a FreeAgent webinar covering all of this.

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By MissAccounting
08th Jun 2018 13:07

I've been ignoring anything MTD related but when does this b*llocks come in that you can no longer manually key in your VAT return figures via the HMRC website?

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Replying to MissAccounting:
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By Wanderer
08th Jun 2018 14:14

MissAccounting wrote:

I've been ignoring anything MTD related but when does this b*llocks come in that you can no longer manually key in your VAT return figures via the HMRC website?

Made me smile!

To answer:-

Citation, commencement and effect
1.—(1) These Regulations may be cited as the Value Added Tax (Amendment) Regulations 2018 and come into force on 1st April 2019.

(2) The amendments made by these regulations have effect from 1st April 2019 where a taxpayer has a prescribed accounting period which begins on that date and otherwise from the first day of a taxpayer’s first prescribed accounting period beginning after the 1st April 2019.

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By Psychic Sue
09th Jun 2018 14:00

Despite all the comments and discussions I still cannot see how this will work in reality for small time Agents.
I have tried to look at VT but it seems to be a system that you have to type in your Trial Balance, rather than a bookkeeping system for each client.
I am looking for a cheap digital system that will do the bookkeeping, like Sage, but that is too expensive on cloud. I am not a fan of Quickbooks, but what other solutions are out there that are cheap. I want a software with multi company so I can do my clients books. I only have a handful of clients so do not want to be paying lots of money for one off or subscriptions. I currently use Taxfiler for a ltd co, but still have to do their bookkeeping on accounting sofware, of which I am currently using sage (pc not cloud).

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Replying to Psychic Sue:
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By Matrix
09th Jun 2018 15:35

You must be looking at VT final accounts (which is great), you need to download VT Transaction+ which you should have if you have downloaded VT. This is the bookkeeping system.

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Replying to Psychic Sue:
By SteLacca
09th Jun 2018 18:20

Sage can be had for around £10 - £15 per month subscription. Whilst I in no way defend forcing taxpayers to pay for software to meet their legal obligations, it's probably less than I spend on day in 2 - 3 days of each month.

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Replying to Psychic Sue:
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By Karina.Harley
21st Jun 2018 13:57

Hi Sue,

Full disclosure up front - I work for Clear Books.

We have a MTD solution for £5 per month (or less if you get multiple subscriptions).

You can request a free demo by entering your details here: https://www.clearbooks.co.uk/book-demo/

My understanding is that VT have announced they won't be MTD compliant, but we have been working with HMRC on the pilot and are now MTD ready.

Kind regards,
Karina

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Replying to Karina.Harley:
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By johnjenkins
22nd Jun 2018 08:48

Hi Karina,
Full disclosure. Does Clearbooks MTD solution have the capability of submitting every transaction, although to start with only totals are required.

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Morph
By kevinringer
12th Jun 2018 14:16

To answer the OP's questions: I've been told by Absolute that they are developing bridging software but have not completed it yet because they are still awaiting specs and APIs from HMRC. I've also been told the user will tell the software which boxes in excel contain VAT return box 1, 2, 3 etc. When the user is ready to file the linking software will take the figures from the boxes it has been linked to and file with HMRC.

MTD requires the digitisation of all transactions but there is no way the linking software can check that all transactions have been input. Indeed there is nothing to prevent the user maintaining paper VAT records then typing the totals only into their spreadsheet.

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Replying to kevinringer:
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By Wanderer
12th Jun 2018 17:28

kevinringer wrote:

Indeed there is nothing to prevent the user maintaining paper VAT records then typing the totals only into their spreadsheet.

Except the law.
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Replying to Wanderer:
Morph
By kevinringer
13th Jun 2018 08:52

Indeed

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