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Nothing like government simplification, massive increase in the amount of time & business costs for those on cash accounting.
Trust HMRC .
the Steve Wright song on Radio 2 always says “It’s later than you think”.
Simon Mayo not Steve Wright!
Neil, you say "Cash accounting scheme – a requirement of MTD is that a business must process all sales and purchases invoices on an individual basis". I can't find this in 700/22. Could you point me in the correct direction please.
Neil, re the subcontractor you mention, would this meet the requirements of 3.3 .2.1 "Where a third party agent makes supplies on your behalf, those supplies do not fall within the digital record keeping requirements until you receive the information from the agent. Where the information is received as a summary document you can treat this document as one invoice issued by you for the purpose of creating your digital record."
Talking about Bridging Software, I have been consulting a software company that are testing 'Bridging Software' already which will be a spreadsheet add-in which can be linked up to any excel multi-tab spreadsheet. This will then connect to their website and pull through the 1-9 vat boxes for filing through the website.
Their website is http://filemyvatreturn.co.uk/ and you can register your interest to be kept in the loop.
Bridging software will be used for compliant spreadsheets, partial exemption and complex VAT schemes, VAT groups and other areas of VAT where the spreadsheet is still the best software to use
Talking about Bridging Software, I have been consulting a software company that are testing 'Bridging Software' already which will be a spreadsheet add-in which can be linked up to any excel multi-tab spreadsheet. This will then connect to their website and pull through the 1-9 vat boxes for filing through the website.
Their website is http://filemyvatreturn.co.uk/ and you can register your interest to be kept in the loop.
Bridging software will be used for compliant spreadsheets, partial exemption and complex VAT schemes, VAT groups and other areas of VAT where the spreadsheet is still the best software to use
Thanks for that. I would want something (ideally off line and on paper with nothing in the cloud although no chance of that) though that does not involve my sending any confidential data to any third party other than HMRC. I don't even use cloud storage and love my paper accounts.
My understanding is that none of the bridging software (the spreadsheet linking software) is cloud: all of it links your spreadsheet (stored on your PC) with HMRC direct.
I also understand that most of the MTD bookkeeping software is cloud based but there are some non-cloud versions eg Sage do a desktop (non-cloud) versions as well as a cloud version.
So that's your off line requirements sorted but unfortunately there's no chance of paper: digitising transactions is a fundamental requirement of MTD. Please note that digitising doesn't mean cloud.
As there are probably thousands if not hundreds of thousands of business owners still using spreadsheets (bear in mind they will all be different) the only real solution to keep those business still using their bespoke excel workbooks is to build an add-in which can be linked up to their digital records... you could use an API enabled spreadsheet which has been built specifically for filing VAT however you will likely loose the flexibility that your current spreadsheet offers you. What we've been working on with http://www.filemyvatreturn.co.uk/is a universal tool which can be incorporated into any spreadsheet- within the add in will be a declarations and submit button. This will then take you to their website (where you will have a login) and upload the box 1-9 figures from your spreadsheet automatically for you which will enable you to file and receive confirmation of submission as with any other software.
As long as the spreadsheet is compliant with https://www.gov.uk/government/publications/vat-notice-70022-making-tax-d... see 3.2 then the add-in will be a simple solution
Neil - did you challenge HMRC on their interpretations ?
They are known to make stuff up from time to time.
Thank you Neil. On another post someone who had read your article in Taxation magazine told us about needing to record each underlying transaction for cash accounting purposes, rather than just blocking together payments for batches of invoices.
I just wish HMRC had made it clear much earlier that they're no longer happy with actual custom and practice.
I can't believe so many people are spending so long analysing all this stuff. I
s there sufficient money in doing so? How much do AW etc pay for articles? I doubt it is anything commesurate with a day rate let alone an hourly rate.
Personally, I thought reading the hundreds of pages the government produce every day was the domain of people who work for CIOT on a salary.
MTD will affect us all. Clients are going to need a lot of support so those of us taking MTD seriously are reading all we can because there's very little concrete info coming out of HMRC. I completely oppose MTD but I've still got to know what it is and how it will impact my clients.
I can't believe so many people are spending so long analysing all this stuff. I
s there sufficient money in doing so? How much do AW etc pay for articles? I doubt it is anything commesurate with a day rate let alone an hourly rate.
Personally, I thought reading the hundreds of pages the government produce every day was the domain of people who work for CIOT on a salary.
You've a shock to come, Ann. For those clients affected, this is much bigger than the introduction of Self Assessment.
If you think that "those who work for CIOT on a salary" will be able to sort out John the Plumber's bookkeeping, I believe you to be sadly mistaken.
Apparently, we're left with the previously unheard of prospect of micro-businesses with turnovers of less than £100000 being compelled to keep full double entry books.
What does the Office of Tax Simplification say about this ?
Nothing ?
What does the Office of Tax Simplification say about this ?
The so-called office of Tax Simplification has absolutely nothing to say about actually simplyfying the system - which could only be signalled by Tolley's reducing the number of pages.
What it concentrates on exclusively is simplifying the collection of extant taxes as seen from HMRC's viewpoint.
The actual practicalities and reduction in overhead by busineses in doing HMRC;s work for them is the furthest thing from their minds [sic].
Is there free software to use, I work with small businesses who aren’t happy about paying for something that was free?
I'm not aware of any free software. HMRC said there would be some, but they aren't developing any. I've read HMRC's specs for the free software and it excludes VAT. That doesn't mean there won't be any but we need to keep in mind that all MTD software is being developed by commercial developers. All will incur costs. How will they recover their costs if they were to release free software? Maybe the software will contain adverts? Maybe the support phone number will be a premium rate number? At the end of the day I can't see the 'free' software being completely free.
Is there free software to use, I work with small businesses who aren’t happy about paying for something that was free?
We should deluge HMRC with enquiries for this free app that keeps your books - all you have to do is take a snap of all your bills with your phone.
Spreadsheets are free to use (well kinda)?
Integrate with bridging software and pay around £10 per VAT return filed (not free but a lot cheaper than paying for monthly software).
Hi As per below regarding flat rate scheme are you saying that flat rate users who do not claim vat on purchases are not required to go on the MTD scheme at all which includes sales invoice input .
Or If we do have to put sales through MTD then you might as well put the purchase invoice through as well as why would you want to put sales on MTD and purchase on another record keeping system ...
Sorry but I’m a very small business owner and serious confused on the whole MTD situation.
“Flat rate scheme – good news to report here. There is no need to digitally process purchase invoices unless input tax is being claimed, which is only for expenditure on capital goods costing more than £2,000 including VAT: “HMRC is not making changes to VAT schemes as part of MTD,” said the press office spokesperson.”
Hi As per below regarding flat rate scheme are you saying that flat rate users who do not claim vat on purchases are not required to go on the MTD scheme at all which includes sales invoice input .
No - you're stuck with MTD too. But you only have to record sales and capital purchases over £2000.
MTD requires you to digitise what you are already required to record for VAT. Currently you are required to record (1) all your outputs and (2) inputs costing more than £2000 including VAT. MTD requires the same: nothing more and nothing less.
Currently, some FRS businesses will chose to record all their inputs because they need them for income tax purposes. Businesses may make the same decision with MTD for VAT.
We must remember that in 2020 (or later) MTD for Income Tax will start and businesses will be required to record everything: all income and all expenses, whether there's VAT or not.
MTD requires you to digitise what you are already required to record for VAT. Currently you are required to record (1) all your outputs and (2) inputs costing more than £2000 including VAT. MTD requires the same: nothing more and nothing less.
Currently, some FRS businesses will chose to record all their inputs because they need them for income tax purposes. Businesses may make the same decision with MTD for VAT.
We must remember that in 2020 (or later) MTD for Income Tax will start and businesses will be required to record everything: all income and all expenses, whether there's VAT or not.
Well, I agree with you Kevin. However, the fact is that HMRC clearly do not.
And I reckon that a defence of "Well, Kevin Ringer agreed with me an Aweb" won't carry a lot of weight at a Tribunal.
And I reckon that a defence of "Well, Kevin Ringer agreed with me an Aweb" won't carry a lot of weight at a Tribunal.
No, but my defence "lionofludesch agreed with me" will ;-)
I have a client, a boarding kennels, on the FRS, and we were planning to use FreeAgent to capture the sales as they appear on the bank feeds which, as they are mostly credit card sales (or cash/cheque deposits into the bank), would be an agglomeration of several sales. Are they actually going to want the individual sales to each customer recorded ?
I have a client, a boarding kennels, on the FRS, and we were planning to use FreeAgent to capture the sales as they appear on the bank feeds which, as they are mostly credit card sales (or cash/cheque deposits into the bank), would be an agglomeration of several sales. Are they actually going to want the individual sales to each customer recorded ?
Maybe. It depends.
Can you identify each customer electronically from the back-up blurb you get? Can you treat these as retail sales ?
Only users of VAT Retail Schemes can record Daily Gross Takings instead of individual sales - see https://www.gov.uk/government/consultations/making-tax-digital-reforms-a.... You can only use VAT Retail Schemes for the sale of goods - see https://www.gov.uk/vat-retail-schemes. The boarding kennels is a service, not goods, so you can't use a VAT Retail Scheme therefore you cannot get away with just recording Daily Gross Takings. You will have to record each sale.
Which is, of course, a nonsense where all sales are at the same rate.
I have a client with a couple of thousand warranties on a monthly basis. All standard rated. But now they need to be recorded separately.
A nonsense indeed because though MTD requires separate recording of each transaction there's no way HMRC can check if that has actually occurred eg if the businesses uses spreadsheets the linking software merely links to the totals and has no way of checking whether that total is of a list of each transaction, or of the daily totals or indeed whether it is merely a total for quarter from paper records. There's going to be a huge gap between what HMRC expect and what businesses will do to submit their VAT return, I mean VAT submission.
Only users of VAT Retail Schemes can record Daily Gross Takings instead of individual sales - see https://www.gov.uk/government/consultations/making-tax-digital-reforms-a.... You can only use VAT Retail Schemes for the sale of goods - see https://www.gov.uk/vat-retail-schemes. The boarding kennels is a service, not goods, so you can't use a VAT Retail Scheme therefore you cannot get away with just recording Daily Gross Takings. You will have to record each sale.
For membership organisations with tens of thousands members, does that mean any membership fees paid would need to be recorded individually?
Yes - section 3.3.2 of https://www.gov.uk/government/publications/vat-notice-70022-making-tax-d...
'For each supply you make you must record ...'
Section 3.5 permits recording of Daily Gross Takings, but this is for retail schemes only and retail schemes can only apply to goods and not services.
'For each supply you make you must record ...'
Section 3.5 permits recording of Daily Gross Takings, but this is for retail schemes only and retail schemes can only apply to goods and not services.
Hairdressers are going to be fun, aren't they ?
I'm thinking that Retail Services is an area which needs urgently looking at. Though I'm not sure the definition for MTD is the same as the definition for Retail Schemes in the traditional sense.
For those with masses of transactions that all get paid into the bank accounts, have a look at Xero or Quickbooks "cash coding" - can batch process hundreds of transactions in seconds.
Bank rules - Sage 50cloud (ie the desktop product) has bank rules. Sage Business Cloud Accounting will also have it soon.
Sage Business Cloud is a very poor product considering how amazing line 50 has been.
It is not a simple case as bank rules as you still need to "okay" each transaction... in cash coding you are basically using the software like a spreadsheet with filters on, which enable you to process 100's of transactions at once.
Bank rules in this instance would be a must but then you need cash coding to automatically post up the transactions once complete
For those with masses of transactions that all get paid into the bank accounts, have a look at Xero or Quickbooks "cash coding" - can batch process hundreds of transactions in seconds.
Needs setting up, though. My client expects to waste hundreds of hours transferring from his existing system to the new software which he only needs to satisfy HMRC.
A prospect retailer client has about 40 invoices per about 5 suppliers and they provide a monthly statement, showing clearly the gross net and VAT. I am assuming it will be OK to enter that statement as an invoice- as long as that's what gets paid -as a means of splitting the VAT instead of entering each item.
I guess this is the point of Neil Warren's article - you have to record each purchase. I've not read the article but have referred to 3.3.3 of https://www.gov.uk/government/publications/vat-notice-70022-making-tax-d...
'For each supply you receive you must record ...'
A prospect retailer client has about 40 invoices per about 5 suppliers and they provide a monthly statement, showing clearly the gross net and VAT. I am assuming it will be OK to enter that statement as an invoice- as long as that's what gets paid -as a means of splitting the VAT instead of entering each item.
I'd be assuming it wasn't OK. A statement isn't an invoice.
Does anyone know of software which is going to cope with submitting a VAT return via MTD with a retail scheme in place ?
Presumably you will need the ability to adjust the VAT return figures prior to submission
All being done on a spreadsheet at the moment.
Kashflow support were vague - the person who might know the answer is on holiday. Lucky them.
Does anyone know of software which is going to cope with submitting a VAT return via MTD with a retail scheme in place ?
Or Partial Exemption ?
Or TOMS ?
Or a dozen other non-standard situations ?