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MTD for VAT Bridging Software is here to Stay

HMRC debunk claims of MTD for VAT bridging software only being a temporary solution.

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I have noted a few comments within this forum and within news articles of this site that claim Making Tax Digital for VAT bridging software is only a temporary solution. We can put that claim to rest once and for all with official statements from HMRC. Below are the sources and comments made by HMRC:

MTD Developer Newsletter:
“While we welcome all of your assistance with raising MTD awareness we have also received a small number of complaints about some developer material suggesting that bridging products will be unsupported after 2020. This is incorrect, we have no plans to stop supporting bridging solutions.”

Direct email in reply to a question asking if bridging software is only a temporary solution until April 2020:
“We couldn’t remove bridging products that quickly even if we wanted to. It would require giving business notice that they have to change the way they file.”

Hopefully both these comments give businesses the confidence in being able to use MTD bridging solutions (that offer a link to MTD from spreadsheets and non-MTD complaint accounting software) for the long term.

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25th Jun 2019 09:06

Yes but they'd have to get far more complex if HMRC's ultimate aims, which the chancellor hinted are likely to start in 2021, come to fruition.

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25th Jun 2019 09:16

what kind of software does your company sell?

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to JCresswellTax
25th Jun 2019 11:06

JCresswellTax wrote:

what kind of software does your company sell?

Bridging software! If you are in need of a solution you can take a look at what we offer here... https://easymtdvat.com

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25th Jun 2019 09:40

This has been my understanding all along.

I simply don't see how they would get rid of it, as its virtually impossible in law to define what is "good" electronic bookkeeping and what is "bad".

Moreover it would be relatively simple to take data froma "bad" bookkeeping system and knock in "quarter books" for the 2 lines of data as a journal and produce "compliant" bookkeeping.

HMRC know this is a bag of bobbins and wont raise and revenue. Once its working (ish) they will trumpet the huge "success" of this utter farce, and move on.

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to ireallyshouldknowthisbut
25th Jun 2019 09:45

ireallyshouldknowthisbut wrote:

I simply don't see how they would get rid of it, as its virtually impossible in law to define what is "good" electronic bookkeeping and what is "bad".

Doubt if it's "impossible". But it's good to know that the option is still on the table for the foreseeable future, if not for ever.

Doesn't bother me as it happens.

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to ireallyshouldknowthisbut
25th Jun 2019 10:01

ireallyshouldknowthisbut wrote:

I simply don't see how they would get rid of it, as its virtually impossible in law to define what is "good" electronic bookkeeping and what is "bad"......

Yes, but extremely simple to define in law transaction reporting rather than summary reporting.
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25th Jun 2019 09:44

“We couldn’t remove bridging products that quickly even if we wanted to. It would require giving business notice that they have to change the way they file.”

Well if they notified businesses now that they were ending support for bridging software in April 2020, that'd still be more notice than they gave most of them about MTD in the first place.

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25th Jun 2019 10:30

I also believe bridging will be here to stay.

The problem is that bridging is fine as long as it is bridging to a system that is complying to the MTD record keeping requirements.

- Excel spreadsheets that do have sales or purchase ledgers
- MTD for IT has set expense categories
- When MTD for CT comes in there will have to be reporting of shareholders dividends and their tax references

As I have said before, where there is partial exemption or a group scheme then bridging is an excellent long term solution otherwise you are just delaying the unavoidable of moving to some sort of cloud system.

(All our bank transactions and tax details are already on the cloud so what are you trying to keep off the cloud the £3 cash purchase in Sainsbury's?)

However the cloud software companies should not be smiling. One of the major software companies is offering a cloud cashbook product. I have a query with them asking if it is MTD compliant because it just records bank transactions and has no purchase ledger or sales ledger. The only way it could become compliant if you only ever pay single invoices.

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to david.bransbury
25th Jun 2019 11:38

david.bransbury wrote:
The only way it could become compliant if you only ever pay single invoices.

Not so after the recent HMRC climbdown.

Which just shows how things can change.

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to lionofludesch
25th Jun 2019 12:02

They climbed down on payments on statements where the statement shows the VAT amount and this is all at the same rate.

As far as I am aware they basic requirement is still "each supply is recorded", which is therefore the Achilles heel for recording on a cash basis.

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to david.bransbury
25th Jun 2019 12:38

david.bransbury wrote:

..... and this is all at the same rate.

Not what the climb down says. It actually says:-
HMRC wrote:
Where a supplier issues a statement for a period you may record the totals from the supplier statement (rather than the individual invoices) provided all supplies on the statement are to be included on the same return and the total VAT charged at each rate is shown.
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to Wanderer
25th Jun 2019 13:26

Sorry you are correct.

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to david.bransbury
25th Jun 2019 15:11

Look - let's be honest. No officer is going to bother with this at a control visit.

We've all been doing it wrong for 42 years, apparently, and nobody said anything.

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25th Jun 2019 11:54

I disagree to some extent with the thrust of the OP.

I will wager that 75% of all the new bridging software companies will be gone within 18 months. They jumped on a rickety bandwagon and are effectively acting as unpaid support staff for HMRC. So some bridging software may be around for a while but not all.

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to Tim Vane
25th Jun 2019 13:01

Tim Vane wrote:

I disagree to some extent with the thrust of the OP.

I will wager that 75% of all the new bridging software companies will be gone within 18 months. They jumped on a rickety bandwagon and are effectively acting as unpaid support staff for HMRC. So some bridging software may be around for a while but not all.

The context of the op was to inform people that HMRC does not intend to shelve MTD bridging software, not whether individual solutions will still be around in 18 months.

I do suspect your prediction will be right for some solutions, but as long as HMRC keep the bridging element alive, there will always be developers out there providing a solution. As has been stated in many MTD related threads, businesses and agents can use multiple MTD solutions, so if a particular one goes the way of the Dodo then users can jump to another without issue.

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25th Jun 2019 13:13

its at this point we need reminding by the Revenue as to what the original intention was...and more to the point how far away from that are we....

my view is that all of this BS makes not a jot of difference to the accuracy of record keeping...but then that objective probably bit the dust long ago...

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