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MTD and FRS VAT - QuickBooks anyone?

I recently moved to QB for client accounting. However I am able to submit standard VAT but not FRS.

I have contacted QB and asked them about MTD and the fact that FRS (Flat Rate Scheme) VAT returns are not able to be submtted digitally via their software. They told me that MTD for VAT does not cover FRS clients, they are initially exempt from MTD, and so, I should continue to use the HMRC portal.

However, when I have looked at the HMRC guidance I can see that the sales data is required to be submitted digitally via softawre not via the HMRC portal. I have asked QB about this but the keep just refering me to their reference pages and not answering the question. 

Is anyone else having a similar experience or any better knowledge than me as to whether the portal can still be used or not for FRS?

 

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16th Nov 2018 14:01

I hope I'm reading your post correctly, i.e. QB say that MTD doesn't apply to those who use the FRS? As far as I know it does. Take a look at VAT notice 700/22

EDIT. If QB can't cope with FRS and MTD (which I find unlikely) you'll have to use bridging software.

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16th Nov 2018 15:44

Yes, you are reading my post correctly. It's bizarre - I moved to QB as it was advertised as MTD ready. For my standard scheme clients it computes the VAT and files direct to HMRC digitally, but the FRS clients it does the calculation, produces the VAT return and then only offers you the chance to copy the figures manually on to the HMRC portal.
If they don't sort it I will probably have to set the clients up as standard accounting with purchases outside the scope and zero rate sales (to get the gross figure in the turnover box, as that is not adjustable in QB) and a quarterly FRS pre-filing adjustment.
I have written to them several times on the subject - it's very frustrating.

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to Arlene0612
19th Nov 2018 11:25

I too have been given the same excuse:

Per QuickBooks Support
QUOTE
It's true that we are not able to directly submit VAT returns on Flat Rate Scheme directly to HMRC through QuickBooks Online. The reason behind this is because HMRCs API doesn't support FRS filing so we are unable to do it through the product either.
We would still provide you with the figures that you would submit to HMRC but you would have to sign in to the HMRC gateway manually and enter the figures in there to make the submission.
With regard to the MTD, we cannot say yet if we can submit FRS directly to HMRC under MTD since we're still in the testing phase. As per HMRC, FRS is not part of the MTD pilot. They should let you know once you are eligible for it or you can check this with them directly before April 2019.
UNQUOTE
I have checked directly with HMRC help line - and companies will have to submit FRS returns under MTD in april 2019

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to amorphet
19th Nov 2018 15:08

So the FRS isn't in the pilot so it can't be tested yet but it's all going ahead in April and it'll be grand.

Annual Accounting anyone ?

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to lionofludesch
19th Nov 2018 15:14

I agree entirely. At least those using annual accounting have until their first VAT report after 1 October 2019 to worry about it. By them hopefully a few of the bugs will be knocked out of the system.

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to tonycourt
19th Nov 2018 15:48

That's my plan. Let someone else have the hassle.

AND you get to start at the beginning of an accounting, not some random point in the middle of one. It wouldn't be a disaster but it would be irritating to have to use two software systems in the same year.

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16th Nov 2018 18:29

I enjoyed reading this with the QuickBooks "MAKING TAX DELIGHTFUL" advert brazzenly on display.

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16th Nov 2018 20:32

Jaysus - it's all unravelling already. I thought it'd last until March at least.

This is supposed to be one of the leading small business options and they don't even know the rules.

Switch to Annual Accounting and buy yourself (at least) six more months. Change your year end to August and it could be seventeen.

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17th Nov 2018 12:32

We have just got a client (who is a spreadsheet user) into the pilot scheme who uses FRS and it is clear from the the VAT notice that FRS is not exempted from MTD.

When people join MTD they stop being able to use the HMRC portal. I have done a video which looks at the differences on the HMRC gateway between the MTD system and the old system.

https://www.youtube.com/watch?v=lCjuVhTR1H0

I think there may be similar issues with partial exemption which may mean that some cloud accounting users need to use bridging software.

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By SXGuy
17th Nov 2018 15:44

Don't use QB so just speculating.

But can you add manual adjustments prior to return submission? If its a flat rate scheme then you would gross up the sales and zero off purchases and adjust sales vat to whatever percentage you use

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to SXGuy
17th Nov 2018 16:01

No manual adjustments allowed with MTD, although you might be able to fudge a result.

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to tonycourt
17th Nov 2018 16:40

tonycourt wrote:

No manual adjustments allowed with MTD, although you might be able to fudge a result.

Depends what you mean by "manual adjustments". Journals are allowed. Re-keying information is not.

Apparently.

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to SXGuy
17th Nov 2018 16:01

No manual adjustments allowed with MTD, although you might be able to fudge a result.

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17th Nov 2018 17:20

Not sure what journals have to do with making entries on the VAT return. They are just part of the "digital journey" of the supporting data.

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to tonycourt
17th Nov 2018 17:53

Getting the right numbers on the VAT return.

As opposed to any old numbers.

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to lionofludesch
17th Nov 2018 18:12

But that has nothing to do with actually reporting the VAT figures, it's only a bookkeeping/accounting function. There is no opportunity in the MTD submission process to manually adjust a figure on the VAT submission. There is no return as such, think along the lines of an RTI submission.

If you haven't read of notice 700/22, I recommend it.

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to tonycourt
17th Nov 2018 18:32

Soft landing apart, I'm not seeing it supporting your view.

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to lionofludesch
17th Nov 2018 19:53

Eh! I followed what you were saying before, but you're not making sense now. Can you explain what you mean by your last comment?

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to tonycourt
18th Nov 2018 10:40

Well, yes. I believe I said journals would be required in some instances.

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to lionofludesch
18th Nov 2018 10:48

Sorry, still not following. What have journals got to do with the submission of VAT figures to HMRC? They're a necessary part of arriving at the figures, but nothing to do with the process of submitting them.

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17th Nov 2018 22:30

The 'digital' requirement might be over-stated.

Of course we can make keyboard based entries to the chosen digital accounting system - journals et al. I think those are the ordinary 'manual adjustments' people are discussing.

Of course there will be no opportunity for further adjustments between the digital accounting system and the MTD submission.

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to Gone Sailing
17th Nov 2018 22:12

Exactly. You've explained it better than me. Should be simple enough for Lion to follow ;-)

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18th Nov 2018 08:18

Yes, HMRC do clearly say in their guidance that there will be instances where pre-filing adjustments are necessary. In the case of FRS clients if I zero rate the sales invoices I can just do an adjustment in Box 1 (QB does allow this) for the VAT and then journal it against sales in the TB after the VAT adjustment is auto-posted to the VAT adjustments control when the return is filed.
Extremely annoying to have to do a work-around all the time to get the figures though!
I wish they would just get their act in gear. Wrote another strong e-mail to them Friday....

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19th Nov 2018 14:51

Dear all, a quick update - I have had a reply from Matthew Taylor at QB:

Hi Arlene,

Let me try to set this straight here.

We want to offer the option to submit VAT for Flat Rate scheme clients. We will not know if this is a solid yes or no till December/January. Please wait till then before expecting an answer on this.

I do however have confidence in our development team as we have been very much ahead of the curve here, especially as we were the first software to submit a return through the MTD portal… way before the pilot became available – which I am aware is live. It is the submission of FRS returns which is not live.

We have a huge amount of resource working on this, so much so that many other areas of development have been put on the back burner to ensure we get everything right. We recently built a bridging software solution as well for clients that have records kept on a software that does not have a digital connection, which almost all other competitors have not built.

A huge amount of invest has gone into this to ensure as many client can be as compliant as they can. I implore you to hold on as no matter what the outcome you will be able to submit the VAT return for FRS clients through QuickBooks. I am very much on your side here and can guarantee that your clients are very lucky to have you working for them.

Kind regards,
Matthew Taylor
Service Delivery Manager | QuickBooks Online

I await the progress with baited breath then......

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to Arlene0612
19th Nov 2018 17:52

Arlene0612 wrote:

It is the submission of FRS returns which is not live.


I am confused by this statement. One of my clients has done an FRS return as part of the open pilot scheme (additionally a client that pays VAT via direct debit). They only use spreadsheets to do their accounts.

FRS is very obviously live as part of MTD.

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