Head of Insight AccountingWEB
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How to buy MTD software

1st Mar 2019
Head of Insight AccountingWEB
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MTD

With the need for information about Making Tax Digital for VAT filing tools building to a crescendo ahead of the start of the April 2019 digital record-keeping and filing tax year, AccountingWEB has opened a new MTD for VAT Software Reviews page.

The government’s long-term mission to introduce universal online tax filing is one of the most controversial and troubled technology projects it has undertaken, but with less than a month to go, it’s time for ditherers to make up their minds and go with suitable “functional compatible software”.

Once a business is signed up for MTD, the old HMRC portal with the nine-box data entry page will be shut down. To ensure a fully digital journey from business transaction to VAT return, HMRC expects records to be kept in digital software. As well as standard bookkeeping and smartphone apps, the base transaction records and more complex calculations to finalise VAT returns can be held on spreadsheets and fed through to HMRC via what it calls “bridging software”.

HMRC recently introduced a new beta test page listing more than 230 MTD products available now, the quest can appear daunting. Like MTD for VAT itself, AccountingWEB’s comparison table is at the public beta stage, but is designed to help accountants and small businesses narrow down their shortlists to more manageable proportions.

In ordinary circumstances, our Software Reviews are fed by user reviews collected from our online Accounting Excellence Software Awards survey. HMRC advises that it now has 10,000 organisations participating in the MTD for VAT pilot scheme, but that means there are very few user reviews to draw on. So we’re going live with product listings for those developers who have responded to our approaches and will add more names as quickly as we can ahead of the April go-live date and beyond.

If you have already tested some of these MTD products, you can help other users by sharing your experiences in our software survey.

Key buying criteria explained

Any software quest needs to start with a solid list of requirements, and for MTD, the best starting point is VAT Notice 700/22  Making Tax Digital for VAT. For software, the main requirements the notice sets out for VAT-registered businesses above the £85,000 turnover threshold are:

  • Keep digital records of transactions for the reporting period in “functional compatible software”
  • Existing VAT record-keeping requirements still apply and be available in digital form for the mandated period of six years
  • VAT return data for the nine current fields must be derived from those digital records and passed via “digital links” from the transaction record through adjustments to the submission of the VAT return to HMRC – Cutting and pasting data between spreadsheets is not permitted
  • The VAT submission to HMRC needs to go into the MTD system via digital programming links (APIs) from either the bookkeeping system or bridging software

Other software considerations

The comparison table lists basic functionality and software links as well as pricing for each product along with a more detailed summary of key buying factors.

After familiarising yourself with the requirements, the next step is to assess what your existing bookkeeping software supplier is doing for MTD – and whether they are going to charge extra for MTD filing or not. Most leading suppliers are very conscious of the MTD challenge and should have communicated their plans by now, and in the majority of cases the filing switch for existing software users is just a question of reconfiguring account IDs and authorisations for the new system.

But there are more issues, starting with whether you looking for a full record-keeping solution, a bridging tool or more sophisticated features not included in many of the more basic offerings.

Practice processes

Accountants in practice will have lots of clients to look after and support through new process. Under MTD they are no longer allowed to sign in using client IDs to file returns on their behalf. Instead, they are required to use commercial software products that communicate with HMRC via application programming interfaces (APIs).

To do this, tax advisers need to set up their own Agent Services Accounts on the MTD platform (in addition to the existing agent account on the HMRC Online server). Already, practitioners are expressing frustration with poor visibility of client status in the new agent portal. HMRC says it is working to improve these facilities, but commercial developers are already looking to fill the vacuum with new workflows and client dashboards to provide more comprehensive information.

With plans still on the table to migrate all business taxpayers into MTD for income tax, and corporation tax to follow at some point, MTD for VAT is just a starting point. So any conversations with practice software suppliers should focus on both the practice’s and the developer’s future MTD plans to ensure they are on the same path.

Replies (37)

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By CJaneH
01st Mar 2019 17:40

I note that 'cutting and pasting' between sheets is not permitted. I was looking at one of the excel bridging products to day and note that the process is to high light the box on your spread sheet and the box on the filing sheet. Just like 'copy and paste'.

Other than it is within the purchased software it seems the same. I am mystified!

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By EnglishRose
02nd Mar 2019 10:51

It is all pretty pointless unless and until they bring in supply of every invoice detail and individual expense detail to HMRC in my view.

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By NewACA
04th Mar 2019 12:54

Using a cell reference in Excel (as opposed to copying and pasting) is considered a digital link by HMRC in accordance with their VAT Notice 700/22. Therefore, you should not conflate copying and pasting with using a cell reference which has long-term use for MTD.

Cutting and pasting is only allowed for the 12 month "soft landing" period.
This is all spelt out in HMRCs VAT Notice 700/22.

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By EnglishRose
02nd Mar 2019 10:49

I wil hvea a look. I just filed what could be my last traditional VAT filing today as my following quarter is within MTD. I may opt not to register and see what happens, just because I am so snowed under with work etc I can hardly find time to eat never mind assess and choose bridging software (I would not use the cloud and our internet line regularly cuts out every day so bridging seems to be the thing for me although I will have to learn excel first too - oh dear)......

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By EnglishRose
02nd Mar 2019 10:53

I just had a very quick look at the list. I wasn't immediately sure which ones avoid cloud storage or perhaps I can take the word "bridge" on the list to mean you don't have to upload anything to the cloud?

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By johnhemming
02nd Mar 2019 13:39

For the software to work you have to transfer the vat return to the software so it can be sent to HMRC.

If the software is not working on a system directly controlled by yourself in the office you are in that really is "the cloud". "The Cloud" is really a number of computers dotted around and not really as amorphous as a cloud made out of water.

Even if you have a desktop system which talks directly to HMRC that will have to be authorised via "The Cloud".

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Replying to EnglishRose:
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By DaveyJonesLocker
02nd Mar 2019 19:58

MTD starts with the first quarter starting on or after 1st April, not ending.

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Replying to EnglishRose:
Morph
By kevinringer
04th Mar 2019 13:27

You should be filing traditional returns for another 3 months. MTD applies to the first VAT period commencing on or after 01/04/19 which is the quarter to 30/06/19.

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By Lorraine93
03rd Mar 2019 10:02

Hi John
Is there any bridging software available with a price under £10 per month?

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By NewACA
04th Mar 2019 12:56

Most bridging software is under £10/month, eg: 123sheets.co.uk

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Replying to Lorraine93:
Morph
By kevinringer
04th Mar 2019 13:35

Absolute is £40 for 13 months for 10 clients so £0.33 per month per client.

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Replying to Lorraine93:
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By johnhemming
04th Mar 2019 20:10

There is a lot that is free in the first year. After that it varies. I am careful not to spam the forum about my own service, but people should not expect to pay large amounts for bridging software for VAT. The question to look at for accountants particularly is how to handle other aspects of MTD which are more complex than VAT.

However, if you don't pay that much for VAT it doesn't matter.

If I were an accountant I would get accounts with a number of providers so that I could get experience with more than one and see what the advantages and disadvantages are of different approaches.

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By AndrewV12
04th Mar 2019 10:40

Reading the replies above, I think a lot of people are going to keep their powder dry on this and leave it until the last minute, or even wait until the deadline has passed and see what reviews come in, I don't trust many of theses MTD providers.

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By Lorraine93
06th Mar 2019 09:10

If you are late submitting your VAT return, penalties will be applied. To be successful on an appeal, you will need to have paid the VAT on time and demonstrate how you have tried to get ready MTD. Just ignoring it is not an advisable approach.
If your VAT quarter is April to June, you have until 7th August to get sorted. In preparation, get the information on a spreadsheet and include the relevant data (tax point/date of supply, net amount, VAT rate, VAT amount, etc).
Don't be an ostrich. Be a responsible business owner. And definitely don't pay a fortune for someone else to sort it unless you want to share your wealth.

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By johnjenkins
06th Mar 2019 09:55

This is, of course, in stark contrast as to the "soft approach". Originally there were going to be no penalties for the first year, regardless. Now (because of HMRC worried that not many will take up MTD) we are told that there will be penalties abound. FTT will, no doubt, be inundated. If your not computer literate how can you appeal, as HMRC will say get someone who can do it to do it. Then, of course you have the cost. Etc. Etc.

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By Ermintrude
06th Mar 2019 12:54

Having only just spent my first few hours of proper in-depth researching of all this and how it'll work in practice, I'm pretty dismayed to see that some matters such as the permitted batching with single entry of e.g. petty cash invoices, dates to use for VAT cash accounting, and FRS digital record keeping - are still being ironed out in discussion with HMRC (by and according to the CIOT). Inconsistencies in guidance and specifics also abound. It seems as if it's as well planned as Brexit. :-(

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By haljim
04th Mar 2019 11:27

My query relates to the impact of migrating to a cloud-based system for MTD and the potential impact on ODBC linkage from the accounting software to Excel in which the management accounts are produced. Can anyone share their experience of this, please...?

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By Homeworker
04th Mar 2019 11:40

Although VT isn't on your list, they have promised that they will be able to file direct with HMRC after the March quarter is passed, so I am hedging my bets and staying with them. They are well priced and easy to use.
I tried looking at others but they were either too expensive, did not have a trial version to look at or were not simple enough for our clients to use.

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By TaxableBen
04th Mar 2019 12:19

I note, too, that VitalTax, is not on your list (yet). Has anybody any experience of filing with it? It is free for the first year and the video looks fairly straight forward.

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By Rozzo52
04th Mar 2019 12:32

The Business Edition of Money Manager 7 by MoneySoft has a range of features to assist in the day-to-day financial management of your business, including MTD and price is £100 plus £20 Vat or £120 incl VAT. Not a cloud based solution which appeals to me as does not place control of Accounting in hands of BigTech Companies pushing their Cloud Software and prices through the roof.

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By johnjenkins
04th Mar 2019 12:57

We have put all our clients on VT now, VAT registered or not. It was a lot of work but, as John says, eventually it'll all be digitalised (I believe there will be many problems though). We have a few clients on Sage and Quickbooks but transferring the figures over is a doddle.

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Replying to johnjenkins:
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By Ermintrude
06th Mar 2019 12:48

I have just had a quick look at VT Transaction + for a manual-books client of mine to go onto - it does look very user friendly, and the annual sub quite cheap. Another software house (anagramsystems.co.uk) reckon VT won't be MVD compliant - a bit of a cheek if not the case and so I've emailed VT. In any event, it won't need to be fully MVD compliant until after the annual sub expires, and might be a good way for my client to break their duck into digital record keeping.

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By legerman
07th Mar 2019 00:20

Ermintrude wrote:

I have just had a quick look at VT Transaction + for a manual-books client of mine to go onto - it does look very user friendly, and the annual sub quite cheap. Another software house (anagramsystems.co.uk) reckon VT won't be MVD compliant - a bit of a cheek if not the case and so I've emailed VT.

VT isn't MTD ready yet, but they are bringing a new version which will be ready in time for the first MTD submissions, which will be MTD compliant.

For single businesses using VT to submit they need the new version of VTT+ which will be £75 + VAT per annum. Agents using VT to submit for multiple clients will need VT accounts which will be £150 + VAT per annum.

If you've recently subscribed I would guess you wouldn't have to pay again for the MTD version.

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Morph
By kevinringer
04th Mar 2019 13:39

Absolute is not on the list. Nor are QuickBooks or Sage.

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By Lorraine93
06th Mar 2019 09:17

QuickBooks is definitely on the list. I have filed successfully through QuickBooks as a business (not a tax afent). QuickBooks had lots of guidance throughout so it was really easy.
My next test is as an agent, and then I'm live testing the bridging software.

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By legerman
05th Mar 2019 21:42

Avalara isn't on your list but isn't ready yet, which I'm surprised at tbh. I registered my interest months ago

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By Ermintrude
06th Mar 2019 12:16

I have a few queries and points;-
1) Are there any NON-cloud MVD packages available? (QuickBooks Desktop Pro 2019 (on monthly sub) is supposed to be - but I can't get any answer or option to purchase from them or their website)
2) Is a manual re-keying as part of the "soft landing" permitted for at least the first year?
3) Client with 1st MVD return with quarters ending Feb, May, Aug, Nov - will need to keep computerised records from 1st June 2019?

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Replying to Ermintrude:
Morph
By kevinringer
06th Mar 2019 12:31

1. Sage 50cloud is non-cloud (ie desktop) despite the name. Almost all bridging software is also non-cloud.
2. Yes. In the first year you need to record transactions digitally and submit them to HMRC digitally but the link between the transactions and the submission doesn't need to be digital.
3. Correct - first quarter starting on or after 01/04/19.

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Replying to kevinringer:
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By Ermintrude
06th Mar 2019 12:43

Thanks - that is very helpful - do you know - is Sage 50cloud like the old PC based (i.e. horribly user-unfriendly), or like the Sage Online (which I was amazed to find quite nice to use)?

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Replying to Ermintrude:
Morph
By kevinringer
07th Mar 2019 14:27

Sage 50cloud is the PC based one and is just like older Sage. Most people tend to prefer the old Sage and hate the new SageOne interface which is one reason a lot of our clients have subscribed to Sage 50cloud.

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Replying to kevinringer:
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By Ermintrude
07th Mar 2019 14:38

Oh that's interesting! I've always detested Sage for data extraction (data input seems easy enough - unless you want to edit an entry! - which is why I guess users quite like it). I rather liked Sage Online though. Happily QuickBooks confirmed, and I have now purchased, Desktop Pro 2019 MTD compliant.

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By Lorraine93
07th Mar 2019 23:45

You can buy QuickBooks desktop but it's very difficult to get through to the correct department. However, the price is £40-£50 per month, so it's not a viable option for most small businesses.

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By Ermintrude
10th Mar 2019 16:55

I was very lucky that the salesperson returned my call the day after I left an answerphone message, and signed me up. I am also lucky that I am paying rather less than you mention, and that is for the Pro version (I don't know if there are less sophisticated and cheaper QuickBooks desktop MVD options for small businesses, I am a practitioner). I particularly wanted a desktop package, and have used QuickBooks in my practice for a number of years, and 2019 looks similar to 2015 so hopefully no learning curve. I would not recommend this software to my clients - necessarily - particularly if they are happy using cloud software (their speed of input will be that much slower than mine so they probably wouldn't notice any difference).

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By DH242
06th Mar 2019 19:00

I'm a sole trader. I'm a business writer. VAT registered. T/O about £85k annual, but half of that is sales of services to US (outside of VAT). So do I need to be MTD compliant for VAT? i.e. does HMRC define the £85k turnover qualification as 'VATable' turnover (meaning I don't qualify) or as total turnover (in which case I will need to comply)? Thanks.

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By Ermintrude
07th Mar 2019 10:23

QuickBooks Desktop Pro 2019 - MTD compliant, monthly sub option only, and I've just (grudgingly) subscribed (wanting to stick with desktop software as it is so much faster).
Question - is there any reason why I should not use this as "bridging software"? Assuming I'm satisfied that clients are keeping proper electronic records and provide detailed reports (to maintain a clear and thorugh audit trail), and for the first "soft landing" year only, could I enter their VAT return figures by way of journals or batched totals and file via my software?

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Replying to Ermintrude:
Morph
By kevinringer
07th Mar 2019 14:30

You can use any software as bridging software. During the soft landing period you don't need a digital link between the digital records and the digital submission, so 'yes', if your clients are recording their transactions digitally they can tell you the VAT return totals and you input them as journals into QB and file using QB.

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By SamPayne
11th Mar 2019 15:39

Ive been using BTCHub from BTC for a while now and find that it's very reasonable. The support is great. They seem pretty up to date!

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