Share this content

MTD submission work-around for manual bookkeeping

Didn't find your answer?

I have recently purchased an excel bolt-on or bridging software which enables me to comply with the MTD VAT return submission requirement.

The bridging software works by linking and allocating the totals of an existing excel spreadsheet to the provider’s spreadsheet which contains boxes 1 to 9 aswell as company name and start and end dates for the quarter. Once the totals have been linked and allocated the return can be submitted (after April 1st 2019). This got me thinking, as some of my clients still prefer manual bookkeeping, would it would be possible to create a spreadsheet which solely contains just the necessary totals and company info for the quarter, without any workings or breakdowns, then link this to the provider’s spreadsheet and submit.

I have tested this by using a previous vat quarters totals onto a spreadsheet and linking it to the provider’s spreadsheet and no red flags presented themselves, I am not able to do I live submission yet.

Is there any reason as to why this method cannot be used?

Replies (21)

Please login or register to join the discussion.

Maytuna
By DJKL
13th Mar 2019 12:36

Your client would not be keeping the required digital records re each supply received and each supply made (unless retail which permits each day's figures)

Read the guidance, especially at 4, Digital record-keeping

https://www.gov.uk/government/publications/vat-notice-70022-making-tax-d...

Thanks (0)
Replying to DJKL:
avatar
By Gert
13th Mar 2019 13:52

Initially does that matter with no penalties at present for non compliance I assume that all HMRC are interested in is firstly getting the VAT due paid & secondly receiving the VAT return each quarter . As far as I am aware they do not have the resources to check out each business because if they did have the resources for large scale checks of business records then they wouldn't be engaging in this , for them , cost cutting exercise . So in the short term this method for MTD would work & would only become a problem in the unlikely event of the client receiving a VAT inspection .

Thanks (0)
Replying to Gert:
avatar
By Wanderer
13th Mar 2019 13:53

Gert wrote:

Initially does that matter with no penalties at present for non compliance ....

Think you may have misread / misinterpreted where you are getting that from.
Thanks (0)
Replying to Gert:
Maytuna
By DJKL
13th Mar 2019 14:05

Each to his own, in the words of Fleetwood Mac, "You can go your own way,Go your own way" but that is not my approach, hence my practice is currently in wind down mode with all impacted clients going to A N Others for post April vat and the rest(non registered/registered below threshold) transitioning out over the summer. By 30 September I will be free of all clients.

I cannot see how you can do this for clients ,informing them in writing to protect your firm from their right of recourse against you, but at same time not make yourself complicit with their non performance of their legal obligations by stating same in writing.

Thanks (0)
By ireallyshouldknowthisbut
13th Mar 2019 13:00

It will work technically to fling the same data to HMRC

It wont be compliant.

The question is do you or your client care its not compliant?

ie are you happy to stay "as is" and rule break? Or do you want to do it all by the book?

That is a question for the client not you to answer. I think many will be raising their middle finger in the vague direction of HMRC HQ rather than completely changing their whole bookkeeping system.

Thanks (1)
Replying to ireallyshouldknowthisbut:
avatar
By Gert
13th Mar 2019 13:17

If it works then I'm all for it rather than ask my clients to spend money on some compliant software just because of these ridiculous new rules from HMRC

Thanks (1)
Replying to Gert:
Maytuna
By DJKL
13th Mar 2019 13:37

There we differ, imho accountants have a duty to ensure their clients adhere to legislation passed by HMG, however daft the legislation.

The rules are not made up by HMRC they are in response to the various pieces of legislation passed and enacted by HMG.

Thanks (1)
Replying to Gert:
avatar
By Wanderer
13th Mar 2019 13:49

And how are you going to cover that off if in 5 / 10 years time your client is hit with fines for non-compliance and they start pointing the finger?

Thanks (0)
Replying to Wanderer:
By ireallyshouldknowthisbut
13th Mar 2019 14:01

In terms of risk management, you put it in writing now with the client.

You explain exactly what fines could arise at the moment (none without a warning) and HMRC's stance as currently known.

Its about treating the client as an adult able to make rational decisions. Id wager compliance for manual bookkeeping over a 5 year period would be much more than any fine that is on the statute books.

Thanks (0)
Replying to ireallyshouldknowthisbut:
avatar
By Wanderer
13th Mar 2019 14:22

But Gert is suggesting using this for some of his clients who are on manual book-keeping.

Will said client's be able to do what he suggests?

If the inference is that Gert explains the risks and they do it then that is one thing.
If the inference is that Gert explains the risks and then Gert does it then that is something completely different.

Thanks (0)
Replying to Wanderer:
avatar
By Gert
13th Mar 2019 14:06

I will of course make the client aware of the risks of fines for non -compliance but I reckon the money that they will save in the meantime by not having to buy SAGE or some other software ( not to mention the extra time required to train up & actually use the new software) will far out weigh any potential penalties

Thanks (0)
Replying to Gert:
By ireallyshouldknowthisbut
13th Mar 2019 15:23

A risk based attitude to compliance is sensible.

That is quite different from closing your eyes and ignoring laws, its assessing the likelihood and implications of being caught and fully explaining those to the client.

Which is why I don't insist 1 person consultant companies do dividend minutes or put up a plaque on their front door with the reg office address. if they don't want to. Some would find this highly wrong, others highly practical.

As other have mentioned this is of course a great time to assess if your client could save time and money by using modern software. I don't know your client, so I cant assess that, but if its not on, then they should have a good chance at FTT defending any workarounds, but dont overlook an appeal for exemption either.

What would be quite wrong is having " one size fits all" approach to this. Its one client at a time.

Thanks (1)
My photo
By Matrix
13th Mar 2019 13:59

I'm with DJKL etc on this one. You can provide the info to your clients, but they have to make the decision.

I understand the existing gateway will still be open so just submit through that if you are that pro risk (see my views on this by looking at my posts).

Or, as a professional and a business owner, see if you can ensure your clients are compliant and make some fees at the same time.

Thanks (0)
avatar
By GoldLeader
13th Mar 2019 14:53

Theres some great points made about the legality of this by other guys in this thread, so I won't repeat it

What's more interesting is that you're considering this as a move forward, rather than looking at switching the client across to a MTD ready software package like Xero or QBO; sorry to derail the direction a little, but is there any big reason why you're not considering this?

It's not _particularly_ costly, presuming you're paying for a bridging solution, and keeps you 100% compliant, rather than going through a legally risky workaround for your client?

Thanks (0)
avatar
By John R
13th Mar 2019 16:26

The Chancellor's Spring Statement contained the following: "Where businesses are doing their best to comply, no filing or record keeping penalties will be issued. " so surely you leave your client open to penalties if they ignore the rules.

Thanks (0)
Replying to John R:
avatar
By Wanderer
13th Mar 2019 16:42

Interesting that he has referred to light touch to record keeping penalties. Up until very recently everything was suggesting light touch to filing and payment penalties.

He is however only confirming what gov.uk has also recently said:-

gov.uk wrote:
HMRC recognises that businesses will require time to become familiar with the new requirements of MTD. HMRC has been clear that during the first year of mandation, it will take a light touch approach to digital record keeping and filing penalties where businesses are doing their best to comply with the law. But this does not mean a blanket ‘no penalties promise’.
Thanks (1)
Replying to John R:
By ireallyshouldknowthisbut
13th Mar 2019 17:19

@ John R, I assume you are aware of the specific 3 penalty options that can be levied, all of them minor, and all 3 requiring a warning by HMRC?

HMRC's statements are not for the first time, inconsistent with their powers.

Thanks (0)
Replying to ireallyshouldknowthisbut:
avatar
By John R
14th Mar 2019 09:53

Yes, but in my experience clients hate having to pay penalties so the risks of non-compliance must be fully explained.

Thanks (0)
avatar
By johnhemming
13th Mar 2019 17:07

To make it fully compliant you need software which can convert the handwritten accounts to balancing spreadsheets.

I am personally writing this sort of thing at the moment (I did a bit more coding today). It is, however, quite a complicated thing.

I have also referred the issue to HMRC policy so that it can get an official authorisation.

Thanks (0)
avatar
By SXGuy
14th Mar 2019 12:16

With regards to the added expense, I note Quickfile would probably only set your client back £35 per year. Not really a fortune.

And to be frank, if the client doesn't want to train up to use the software, then you provide the service at an additional cost.

I wont be advising my clients to skip the rules, instead they will all have options, and fees will be associated with those options, depending on which they take.

Thanks (1)
Morph
By kevinringer
26th Mar 2019 13:53

Gert wrote:

Is there any reason as to why this method cannot be used?


Yes, the law. You client is required to record their VAT transactions digitally.

However, from a practical point of you, it would work. Indeed, for the first 12 months of MTD there is no need to maintain a digital link between the transaction record and the submission. This means your client can maintain their spreadsheet and phone you with the totals and you input them into your bridging software and file. This will be fully MTD compliant for the first 12 months. After 12 months the data will need to be linked digitally. But for the first 12 months, if a client phones you and says they are telling you the totals from their spreadsheet when in fact they're manual records, how are you to know?

Thanks (1)
Share this content