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MTD for foreign currency records?

Does anyone keep accounting records in non GBP and worked out a way to be MTD compliant?

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Trying to get ready for MTD for VAT but hitting a problem that apparently HMRC and Quickbooks have not come across and neither willing to help us solve this!

Our accounting records are kept in USD (in Quickbooks). Currently we submit the relevant VAT data in GBP on HMRC website. I tried to submit digitally via Quickbooks this quarter but it uploads in USD. I then have to fill out an error form to HMRC.

Has anyone else come across this? 

We are trying to be compliant but both sides are unwilling to help. We can't be the only ones not operating in GBP as their home currency?

Any help appreciated!

Replies (26)

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By nodrogbir
30th Jan 2019 13:00

We are all doomed.

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By Matrix
30th Jan 2019 13:01

I am not familiar with Quickbooks but surely you must be able to convert everything to GBP at any point for the accounts? How do you prepare them?

How do you convert to GBP for the VAT return? Aren't you supposed to calculate the sterling equivalent of the VAT on each invoice?

I would familiarise yourself with the rules and if QB aren't able to help then find a software provider who will.

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Replying to Matrix:
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By rk82
30th Jan 2019 14:22

We prepare and lodge the accounts in USD. So everything in QB converts to Usd as our home curency and all reports are usd, including the vat.
Currently we use spreadsheets to convert the applicable invoices to gbp and calculate the vat.
QuickBooks don't seem to be concerned with our issue, helpfully!

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By jcace
30th Jan 2019 13:05

HMRC's guidance states:
"You can buy goods and services in the currency of your choice. But all purchases or sales must be converted into sterling for VAT purposes.
You must carry out this conversion when you record the transaction in your VAT accounts, so they show the transaction in sterling.

You can invoice in any currency for the goods and services that you supply. If UK VAT is due on the transaction your invoices must also show the following in sterling:
the total net value of goods and services at each VAT rate
the amount of VAT, if any, at each rate"

Sounds like you're going to need to use Excel and some bridging software if you're not entering the transactions in GBP

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Replying to jcace:
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By Matrix
30th Jan 2019 13:11

But it sounds as if the problem already exists before MTD is involved if only the boxes are translated into GBP for the VAT return.

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Replying to Matrix:
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By jcace
30th Jan 2019 13:42

Agreed. But if by necessity everything is recorded in USD with no automatic conversion facility to GBP within the software, perhaps the solution is to export the VAT return transactions to excel and translate each entry, before filing via bridging software. That might be a way round the problems of recording in GBP (for VAT purposes) and submitting under MTD.
Better solution would be to record in GBP though.

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By ireallyshouldknowthisbut
30th Jan 2019 13:10

The answer to ALL such questions is:

***********Bridging Software************

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Replying to ireallyshouldknowthisbut:
Tornado
By Tornado
30th Jan 2019 13:19

I count over 100 programs for Bridging Software available now and about 100 in development on the HMRC Website.

It seems that this software is so easy to create that I am going to have a go myself this afternoon on the back of an envelope.

So this is what the great MTD project is all about!

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Replying to Tornado:
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By johnhemming
30th Jan 2019 18:00

It isn't that easy to create, but it also isn't rocket science.

The solution to this problem is indeed ... (fanfare) bridging software.

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By jimeth
31st Jan 2019 09:50

Sounds like you need more sophisticated software that can hold all transactions and balances in multiple currencies.
Such software does exist but is likely to be more expensive.

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By pauljohnston
31st Jan 2019 11:25

Despite what the rules say if all your accounting is done in USD I find it hard to understand that you need to convert each transaction. But I dont see any other way to do it.

You have not said how many transactions and their value I suspect that the current procedure is to convert all transactions at the quater end date. The answer would appear to be to export the USD figures to Excel and use bridging software to convert and then submit this way.

You cant be the only organisation with this problem.

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By paulclewlow
31st Jan 2019 12:33

If you were using Free Agent you could have multiple bank accounts in any currency and Free Agent automatically converts the invoice and the payment receipt to GBP and puts any difference to a currency gain/loss account at the rate applicable on the day.
I'm afraid my opinion of Quickbooks is not printable.

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By skeapingk
31st Jan 2019 15:33

Don't want to be rude, but this may be a problem of your own making! MTD is just the first step to HMRC reading directly from your GB accounts.

Where does the cash go/come from?
If it's from a GBP account, you are wiser to account accurately using that. If its from a USD account held in the UK, you will presumably want to account using the USD account and recognise any GBP currency gain or loss at the time.

There will shortly be a time when your VAT Return will include a detailed (and reconcilable) transaction detail. That will only be viable if you are able to exclude any FX gain/loss on the specific transaction date.

Quickbooks lets you pick your home currency. What more can you expect?

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Replying to skeapingk:
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By johnhemming
31st Jan 2019 20:55

Whereas OECD has introduced SAF-T and some European Countries are requiring lists of invoices and in some countries a pre-authorisation of invoices, the current plans for MTD do not include any changes to MTD for Vat beyond what is currently specified.

There are some quite complex proposals relating to a number of different areas and my recommendation to anyone looking at what to do is that they consider what is actually happening and has detailed implementation plans and leave any hypothetical considerations to another date.

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Julie Stacey
By Pingsquitch
31st Jan 2019 17:23

I use Sage for foreign currency transactions - the conversion rate is entered before posting so each transaction is converted to GBP so as far as I know, the amounts submitted are correct for VAT so MTD should not be a problem.

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By johnt27
01st Feb 2019 13:09

Drop into bridging software (basically excel), use the HMRC approved FX rates (google them), file VAT return - job done.

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By dalija
01st Feb 2019 16:03

Make sure that your home currency is set to GBP (check settings) and multicurrency is on. We have a few clients with five and more foreign currencies, not only USD. All transactions are being converted to GBP without any problems. Hope this helps.

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By jsmith1
06th Feb 2019 12:23

I have the same issue - Home Currency = USD.
Just spoke to QB and they are developing a bridging software solution but they warned it may only be a temporary fix. Apparently you can register to be part of the pilot scheme. see below

"For clients still stuck in spreadsheets or that work within a complex VAT scheme, our bridging solution offers an MTD compliant solution, now in private pilot, but to be made available prior to the April 2019 deadline."
see https://quickbooks.intuit.com/uk/accountants/mtd/

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By Joan Phelan
13th Feb 2019 11:26

Hi, we are a Euro accounting business based in UK so i know exactly what your problem is - our accounts are submitted to companies house in Euro but our system calculates the VAT return in Euro values.
We set our system fx rate monthly - We export the VAT return to a spreadsheet and convert to GBP using average of our last 3 months fx rate which is accepted by HMRC. For MTD we are going to try using Vital Tax, it is just an excel add-in which is really simple to use, here is the link https://vitaltax.uk/ which brings us back to the question, if you can export and change data what is the point in MTD?!!!

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Replying to Joan Phelan:
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By rk82
14th Feb 2019 10:42

Thanks, you understand my problem, this is what we do but USD home currency. I'll look into this and hopefully its a solution for us both!

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Replying to rk82:
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By dunav
01st Aug 2019 16:37

Hello, I have the same problem as you - how did VitalTax work for you?

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Replying to Joan Phelan:
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By dunav
01st Aug 2019 16:38

Hello, how did VitalTax work out for you?

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Replying to dunav:
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By johnhemming
01st Aug 2019 16:48

Any bridging system should work.

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Replying to johnhemming:
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By dunav
02nd Aug 2019 09:53

Indeed it should, but I imagine some may work better than others and am interested in the experience of those using VitalTax.

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Replying to dunav:
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By johnhemming
02nd Aug 2019 10:12

Given that I write the Vat Direct software I have no experience of Vital Tax, sorry.

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By Joan Phelan
01st Aug 2019 16:58

We now use the excel add-on https://vitaltax.uk/
You need to set the approval up with hmrc but it's really simple, once it's set up you just map the data on your spreadsheet and submit :)

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