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Shilton files MTD for VAT return with Clear Books

31st Aug 2018
Clear Books MTD for VAT submission
MTD for VAT return_Clear Books
Clear Books MTD for VAT submission

On Wednesday 29 August, during a three way video conference with HMRC and his software supplier Clear Books, David Cuthbertson of Shilton Accounting Services submitted his first VAT return within the Making Tax Digital pilot testing programme.

The pilot submission was the first one for Clear Books, and confirms that HMRC is expanding its net of test users after previous successful filings from the likes of IRIS, QuickBooks and BTCSoftware.

As part of work on its latest MTD-compatible products, Clear Books designed and tested the VAT filing mechanism in HMRC’s quarantined “sandbox” environment. After final testing, the application received its pilot filing credentials from the tax department in May.

Then the search was on for suitable candidates that met HMRC’s test criteria, which is where David Cuthbertson’s firm came into the picture.

“We’re great Clear Books fans,” said Cuthbertson. “They contacted me and said they’d identified a particular client who was suitable for the pilot programme and asked if I would consider doing it. I was up for giving it a whirl.”

Simple client scenario

The client in question is a fairly new one-person limited company that uses cash accounting, which posed few complications for VAT filing, the accountant said.

The first step towards the test filing took place a week or so beforehand when Cuthbertson set up Shilton’s agent service account. Initially, he couldn’t see the client online.

“When you set up the agent’s account, it’s a completely new government gateway account. There’s a follow-through process to take your client from the old system to the new, but HMRC didn’t seem to trace my entry first time,” said Cuthbertson.

“We did it again and it worked fine. The client wasn’t really involved because their authorisation was carried over from the previous system.”

MTD for VAT step-by-step

After that minor drama, Cuthbertson was ready to prepare and submit the return from Clear Books. This is how the sequence happened:

Step 1: Create a VAT return in Clear Books

The software preselects invoices for the quarter, allowing the accountant to review the VAT return:

Clear Books MTD for VAT draft return
Clear Books

Step 2: Review and finalise the return

The accountant then reviews the draft return to ensure the data is correct and free of any errors:

Clear Books MTD for VAT finalised return
Clear Books

Step 3: Submit to HMRC

Once the data is selected and reviewed for completeness, submitting it is a single click command, just as it is for the existing VAT system. Within the new process, HMRC will email a receipt number for successful submissions to the agent:

Clear Books MTD for VAT return submission
Clear Books

Clear Books told AccountingWEB the MTD submission functionality had been hidden from users until Wednesday. “Shortly before the submission we switched this functionality on for David and all of his clients. This meant he could see the VAT return menu item in the Clear Books interface and access the three-step return process,” the developer explained.

“The system is designed so that we can toggle David back to the old version of MTD VAT returns in need. Being part of the pilot programme, however, he will continue to submit using the MTD functionality.”

Cuthbertson says he is not particularly techy but found the whole process was “incredibly simple”. Harking back to the problems surrounding real time information, “It was not like that,” he said.

“We’ve got a lot of clients on bookkeeping systems. It’s nice that we won’t have to worry about our Clear Books clients. I would be happy to try some more.”

Shilton also has clients running Sage 50 and is planning to move them onto Sage Business Cloud, but has not yet started to test that set up. “The difficulties will be with the once a quarter shoebox guys and margin schemes,” Cuthbertson continued. “As far as I can see at the moment, there’s no facility to deal with that.”

In spite of those challenges, his advice to other practitioners considering the MTD for VAT pilot is to “go in and have a go".

Replies (16)

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By Silver Birch Accts
03rd Sep 2018 17:37

'during a three way video conference with HMRC and his software supplier Clear Books, David Cuthbertson of Shilton Accounting Services submitted his first VAT return within the Making Tax Digital pilot testing programme.'

Just to file a VAT Return, it was simpler to land a man on the moon!

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Replying to Silver Birch Accts:
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By EnglishRose
07th Sep 2018 10:17

I would have liked more detail on the delay caused by HMRC not recognising him on the system or whatever it was eg did that ake 5 minutes to resolve or did htey have to break the call, spend a lot of time on it and then resume and what would happen if HMRC were not on the line doing a publicity stunt and instead you had the same issue - how much time would you have to spent to resolve it and was the reason they had that fault. In other words the example shows it doesn't quite work rather than it does work surely?

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By youngloch
04th Sep 2018 15:29

I would have expected there to be a step 2.1 known as "obtain the client's agreement to the figures" before pressing the button to submit..........

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Replying to youngloch:
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By EnglishRose
07th Sep 2018 10:17

Indeed. One reason I don't use an accountant actually - I need complete control.

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By Peter-S
06th Sep 2018 10:25

So what is a 'suitable candidate' that meets the 'test criteria'? Wonder how many of them will be representative of our typical client come MTD day!

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By johnjenkins
06th Sep 2018 10:35

Come on don't be so cynical. Perhaps HMRC will take a leaf out of the Brexit negotiations and agree to not agree so putting the final phase off for a couple of years. I know they're two different things but they do tend to mirror each other in the way forward.

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By ShayaG
06th Sep 2018 14:08

The reason why the process was “incredibly simple” was because it was the submission of the same 10 numbers we have been submitting to HMRC for years!

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By SXGuy
07th Sep 2018 05:35

I tested quickfiles version of mtd yesterday. (didn't submit to hmrc) but I must say I'm Bit peed off at the level of information that's being sent.

It was put as a replacement to self assessment, yet all I see is more information at hmrc disposal to query.

Every single client name along with amounts paid, expenses grouped by category.

I apreciate if hmrc wanted to they could obtain these details, but surely this is nothing like a self assessment submission.

Further I noticed that it doesnt always work well, I use journal entries to monitor corporation tax due each month, mtd treated this as an expense before tax.

Something I'd have to make an adjustment on, and no doubt be queried over.

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Replying to SXGuy:
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By johnjenkins
07th Sep 2018 08:52

The idea of MTD is so that HMRC have access to every single transaction a business makes. They can then make sure a business registers for VAT on time and they can do a mundane computer check on every business so it makes it easier to pick those for investigation. The computer will be programmed with lots of little goodies that HMRC won't tell us about (although once stuff starts coming through we will have a pretty good idea of what they are looking at). Then of course the big boys will find ways around it and we back to square one after all the hassle. This course of action will destroy a lot of small business (that is one of the benefits to HMRC of MTD) and we could get back to the pre MT days of large business against large unions. Of course the stagnation that follows will all be blamed on Brexit.

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Replying to SXGuy:
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By EnglishRose
07th Sep 2018 10:21

I was just reading an article about HMRC appearing before the public accounts committee to answer for their apparent breach of data protection law in gathering voice data without express opt outs. I am not sure I trust them if they cannot even get data protection law right (they tried to gather my data that way earlier this year).

If we combine this with "open banking" the banks are doing plus HMRC's new right to access bank statements more easily it does feel we pass the line over to a big brother state.
I am presuming those using bridging software anmd who don't use the cloud for security reasons are not using "quickfiles" so probably for the moment outside this.

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Replying to SXGuy:
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By EnglishRose
11th Sep 2018 10:31

That naming every client is a massive issue for some of us. I am not allowed by law to name clients to anyone without express written permission which I never obtain. I am not prepared to use any software which names clients to anyone.

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By RichBatoul
07th Sep 2018 11:27

The name Shilton conjures up some help from "the hand of God". Or will this just lead to an own goal on the part of the participants in this stage managed test?

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Morph
By kevinringer
18th Sep 2018 09:20

Has anyone looked at the screen shots? First screen shot says 'Quarter ending 20/06/2018' on the left. Who has a quarter ending on the 20th? Also, look at box 6. Quarterly turnover £2620 implying annual turnover £10,480. This isn't a typical MTD business. What is the average turnover of a business caught by MTD? it will be anything from £85,000 to millions. So they should be using a business with turnover of at least £1 million for testing. And look at the expenses: £436 for the quarter = £1744 for the year. This is not a suitable business for testing. We need to see results for the businesses of the size that has to comply with MTD. How does the software deal with partial exemption, retail schemes, second hand goods schemes etc.

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Replying to kevinringer:
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By EnglishRose
18th Sep 2018 16:37

Yes, that worries me. My own affairs are quite complex and nothing like the example you quote. I am not prepared to take a leap of faith using some bridging software not even yet available. in order to ensure I pay the correct VAT I almost feel I will need to break the rules and just produce an excel sheet with all my turnover as one invoice and all my 20% VAT expenses as one huge expense, pout them on the excel sheet, apply the "bridging software" once it exists to that and then I will be sure the resulting figures are correct. If I start fidding around with new software products I don't know or trust there seems much less chance HMRC will receive the correct figures.

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Replying to EnglishRose:
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By johnjenkins
19th Sep 2018 08:50

You've made a very interesting point.
What is more important "digitisation" or getting the VAT correct. According to HMRC they go hand in hand, I'm not so sure that'll be the case in every scenario.

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Replying to johnjenkins:
Morph
By kevinringer
19th Sep 2018 13:47

Far from being the case for every scenario, I expect digitisation to increase errors. Look at Sage for example which defaults to T1 and so attempts to reclaim VAT on insurance, business rates, drawings! Sage has been around for decades and by now should be intelligent enough not to make these mistakes. HMRC are pushing all this software onto us all but the software doesn't work. HMRC is completely ignoring all the shortcomings such as inability to handle retail schemes, partial exemption etc.

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