MTD: Avalara bridges the spreadsheet gap

 Cable-stayed bridge in the construction process
istock_AS_Fotos
Share this content

Avalara MTD Filer is a free product which will read data from an Excel spreadsheet, and submit the VAT return figures to HMRC in the format required under MTD.

Many VAT registered businesses and their advisers have worried about the cost of MTD compliant software, and how they will convert accounting systems based on spreadsheets to meet the filing requirements of MTD for VAT. The Avalara MTD Filer meets both of these problems head-on, as it is free to download, and it will automatically install itself into any computer’s version of Excel.

The Avalara MTD Filer software will allow the business to review, authorise and send VAT returns to HMRC via the approved API for MTD. That API will also retrieve from HMRC the VAT payment history for all the VAT returns submitted by the business, show all its VAT liabilities, and highlight whether there are any outstanding VAT returns.    

How does it work?

Richard Asquith, VP Global Indirect Tax at Avalara, explained that as soon as the MTD Filer code is downloaded from the Avalara website it inserts itself as an add-in to the version of Excel on the computer. The user can then link their VAT data to the spreadsheet. Asquith commented: “We have made the instructions as simple as possible as VAT registered businesses need a quick and easy solution to VAT filing under MTD.”

Suitable for small business

The Avalara MTD Filer is suitable for small businesses who currently use spreadsheets to keep their VAT records. HMRC has confirmed that spreadsheets do qualify as digital records for the MTD for VAT regulations (SI 2018/261).

As long as the spreadsheet contains all three of the data items required for sales and purchases (see box) for each transaction, the business will be MTD-compliant. Retailers who use one of the retail schemes for VAT will be permitted to record the gross daily takings as they do now, rather than having to digitally record each individual transaction.

Asquith said: “It feels great that we're able to help the estimated 800,000 small businesses that would otherwise have to invest time and money in learning to use some software.”

Digital links

The Avalara MTD Filer also provides a digital link from the spreadsheet to the API which submits the VAT return, so the digital link element of the MTD regulations is also met.

Businesses with multiple accounting systems often use a spreadsheet to bring together the VAT figures from the divisions or companies, in order to consolidate the data into one VAT return for the organisation or group.

The Avalara MTD Filer will be a simple solution for these larger organisations, as they won’t have to develop new software to replace the functions undertaken on the spreadsheet. The links between the consolidating spreadsheet and the various accounting systems will have to be digital from April 2020, but for 2019/20 HMRC has granted a soft-landing to allow time for those digital links to be developed.

Bridges built?

When HMRC reluctantly agreed that a spreadsheet would be an acceptable medium in which to record and preserve digital records, they invented the term “bridging software” to fill the gap between the spreadsheet and the API which is used to submit tax data to HMRC. At that stage bridging software was still a figment of HMRC’s collective imagination, but now it is a reality.

The Avalara MTD Filer is not the only bridging software on the market. Intuit has launched bridging software which will transfer Excel-based calculations into the new QuickBooks end to end MTD for VAT software. BTCSoftware has announced an MTD for VAT solution which posts data from spreadsheets into a compliant submission, and Absolute Accounting Software has jumped in with Absolute Excel VAT Filer. We also understand that Liquid VATFiler will be free for single users and single company entities.

Meanwhile, VT Transactions+ has partnered with Forbes Computing and a number of other software producers, to develop VAT filing applications which suck-in VAT data created within VT transactions and serve up an MTD-compliant VAT return.

Accounting giant PwC has also produced some bridging software which it is making available to charities for free, and presumably will sell to other organisations.

Data required for each transaction

Sales: Purchases:
  • date of tax point of supply
  • date of tax point of purchase
  • net value excluding VAT
  • net value of the purchase
  • rate of VAT charged
  • amount of input tax to claim

About Rebecca Cave

Consulting tax editor for Accountingweb.co.uk. I also co-author several annual tax books for Bloomsbury Professional and write newsletters for other publishers.

Replies

Please login or register to join the discussion.

By tom123
02nd Oct 2018 13:09

Is it able to be downloaded yet?

Thanks (0)
avatar
to tom123
09th Oct 2018 09:52

I don't think so which is why this advertising by them and others is unfair. No one yet has a product you can download and start learning because HMRC have not specified it yet. It is good they intend to offer a free product in due course once HMRC have told them what it needs but HMRC seem to be dragging their heels.

Thanks (0)
avatar
By Vitaliy
to EnglishRose
10th Dec 2018 19:14

Free Excel bridging software, works on Windows, Mac and Office 365: https://vitaltax.uk

Thanks (0)
avatar
By Dandan
02nd Oct 2018 13:19

Thank you for dispelling the myths.

MTD and Spreadsheets were never going to be an issue. Yet, there has been so much fearmongering lately and we know who were behind it.

Thanks (3)
to Dandan
02nd Oct 2018 17:26

Surely they were going to be an issue until HMRC backtracked and said they would allow them? And still, up until some tested, robust solutions are on the market, they still are an issue.

Thanks (2)
avatar
By Dandan
04th Oct 2018 12:39

Quite true. Still an issue but not a big one, in my view.

Thanks (0)
By Tornado
02nd Oct 2018 13:59

Can this be adapted to work with non-Excel spreadsheets or bespoke software. e.g. can a csv file be extracted from the non-Excel spreadsheet by the bridging software?

I believe some other bridging software already announced can do this.

Thanks (0)
02nd Oct 2018 16:58

I would imagine this what most practitioners would be looking for to bridge the gap as oppose to what QBO were offering last week when you had to take a subscription for each client to allow you to file the vat returns 4 times a year.

Thanks (2)
02nd Oct 2018 19:27

This is great (subject to getting my hands on the download). A simple piece of free software that HMRC should have provided. Well done Avalara, customer goodwill from hundreds of accountants guaranteed. With this and the face that flat rate scheme businesses are exempt from digital records current MTD requirement should not be that onerous (for now)

Thanks (4)
avatar
02nd Oct 2018 20:35

Sounds good (I will still have to learn to use excel which I detest). I don't see it available anywhere yet though - I just looked. Not here https://www.avalara.com/eu/en/products/avalara-vat-reporting.html?sessio...

Also can anywhere have any available yet when I thought HMRC had not specified what was required as yet?

It sounds like it does something to your excel programme which always worried me. I like everything stand alone and not affecting any files or software I already have on there but hopefully will be simple to use although even words like API mean nothing to me.

So I would create for the first time an excel sheet showing invoice amounts, rate of VAT, gross amount and that rests on my pc as the record. Then once this is downloaded it adds a box or something to excel so when I look at excel on screen it looks a bit different. I don't what "link their VAT data to the spreadsheet" means. Surely the VAT data is typed into the spread sheet as you produce each invoice.

It provies a digitl link from spreadsheet to API which submits the VAT reutnr. I don't really know what that means. Does the excel page some how dial up direct to HMRC and say Mrs Smith is here wanting to subit her VAT figures which are coming straight off the spreadsheet -for the 8 or 9 VAT return boxes; here it comes and then it sort of emails the whole thing to HMRC presumably accessing Mrs Smith's HMRC account in some way during the process? How does Mrs Smith type in the HMRC passwords for her account to link the two?

Thanks (0)
avatar
09th Oct 2018 09:54

.

Thanks (0)
avatar
By Ammie
04th Oct 2018 10:25

The first positive and rational move on the subject I have heard.

Lets hope it works and is here to stay and that HMRC don't conjure up another "cunning" plan to prevent the use of spreadsheets down the line.

I will watch this space closely.

Thanks (2)
avatar
By Dandan
to Ammie
04th Oct 2018 12:46

Not wishing to start conspiracy theories about the reason behind the initial move to prevent the use of Spreadsheet, HMRC may well conjure up another way to force people to commit to cloud software.

Thanks (0)
avatar
04th Oct 2018 10:37

I wonder . . . . . would it work okay on a Mac or would one need to be using Windows?
Also . . . . . it would be usable from an Agent point of view (e.g. storing usernames, passwords etc. in a convenient way).

Thanks (0)
avatar
04th Oct 2018 10:41

1. has anyone used this to see if it works and

B. why is it free...

iii. Will it disappear if theres no income stream to support it? We will all pay £1/qtr and they will make a million a month.

Thanks (2)
avatar
04th Oct 2018 11:32

Just registered my 'intrest' [sic]:

"Thank you for your intrest in MTD Filer we will contact with more information on how to download your free excel add-on."

Hoping the software has been checked more thoroughly than Avalara's 'Thank you' landing page.

Still, it's free (just like the Government Gateway!) so we shouldn't be ungrateful...

Thanks (2)
By djn24
04th Oct 2018 11:36

-date of tax point of supply

Are they really saying that for example a Chinese takeaway needs to record every single transaction on that Excel list?
Why can't weekly totals be used?

Thanks (1)
avatar
By Dandan
to djn24
04th Oct 2018 13:09

Interest point. Unless, I am mistaken, there has not been any discussion on this matter of tax point as in the chinese takeaway example.

What is digital ? I would expect that the first stage of a small chinese takeaway (with basic till) recording its sales would be counting the money at the end of the day or additing up individual till receipts. Then making the first Digital entry on Excel for the Total , VAT and Net for the day. Surely , that should satisfy the digital requirement (whether the shop uses Excel or accounting software.).

There is no bridging software in the Universe (or Multiverse) that can digitalise cash ; you still have to sit down and count it .

Thanks (1)
avatar
to Dandan
04th Oct 2018 13:18

I think the point is rather than taking the daily reading on the till and entering it in the spreadsheet, you enter each individual sale.

The point is if a vat inspector makes a test purchase and pays cash, how will they trace it was recorded in the records if there is only a daily total.

So each entry must be recorded individually.

The easy way is to go cashless and take only credit cards.

But then I am told that means there margins increase and their vat and IT/CT increases...or am I being cynical?

I don't think counting cash falls into capturing the sales correctly

Thanks (1)
avatar
to Dandan
04th Oct 2018 16:49

And all at the same time as #Brexit
But apparently vat will be abolished then someone told me as its a European tax....

Thanks (0)
avatar
By Dandan
to Tom 7000
04th Oct 2018 13:31

Tom 7000 wrote:

I don't think counting cash falls into capturing the sales correctly

If it does not I would be very surprised. Imagine all the fish and chip shops, chinese takeaways, pop up restaurants and Taxis.Also, bear in mind that most transactions will be in cash and not CCs or debit cards.

What does HMRC expect those hundreds of thousands of business people to do? Stop taking cash ?

I think that a summary total on Excel or a Sales receipt invoice on Accounting software for the whole day will suffice otherwise we are entering into the realm of the totally ridiculous.

Thanks (2)
avatar
By Dandan
to djn24
04th Oct 2018 13:47

djn24 wrote:

-date of tax point of supply

Are they really saying that for example a Chinese takeaway needs to record every single transaction on that Excel list?
Why can't weekly totals be used?

I have just read the article by Rebecca Cave again and noticed the following :-

Quote:
"Retailers who use one of the retail schemes for VAT will be permitted to record the gross daily takings as they do now, rather than having to digitally record each individual transaction"
Thanks (1)
By djn24
to Dandan
05th Oct 2018 10:21

Retailers scheme? So cash accounting for VAT wouldn't qualify would it?

Thanks (0)
to djn24
05th Oct 2018 11:15

All VAT registered businesses will be able to use spreadsheet bridging software regardless of what schemes etc they use. The accountant/client must ensure the spreadsheet (a) records all transactions and (b) calculates the VAT correctly including any schemes. The bridging software then links the accountat/client totals to HMRC.

Thanks (2)
By djn24
to kevinringer
08th Oct 2018 15:38

Yet another expense for a small business. Some of our takeaway clients still don't use tills.

Thanks (1)
to djn24
08th Oct 2018 15:52

And HMRC thinks that most businesses use software or spreadsheets. HMRC should know from its experience of SA and VAT enquiries that many businesses use paper records.

Thanks (2)
avatar
04th Oct 2018 13:25

Will it be possible to use this to file via the agent portal? Or will it only be suitable for businesses to use themselves?

Thanks (1)
04th Oct 2018 13:51

I too would like to know whether this could be used by agents. Can the agent user their user ID and password or would they have to use the client's details?

Thanks (0)
04th Oct 2018 14:02

How come the software is free? What's the catch?

Thanks (1)
avatar
By Dandan
to kevinringer
18th Oct 2018 13:37

The catch is obvious to me. Uncle Sam trying to get their nose into british business. I understand it is a US company behind it . They are likely to be funded by the US gov. Hence everything is free.

Not content with having harvested all the last UK census data (managed and delivered by a US defense company), they want more.

Mind you they are just "registering an interest". Still there is light at the end of the tunnel. Rebecca's article does a lot to stop the scaremongering.

Thanks (1)
By AndySCL
04th Oct 2018 14:19

Hi Rebecca
Will this software package be able to cope with companies who use the Flat Rate VAT Scheme?
Thanks
Andy

Thanks (0)
to AndySCL
04th Oct 2018 14:34

I think I can answer this - Avalara isn't a software package - it is spreadsheet bridging software - you build the spreadsheet with all the FRS built into it - Avalara has the API which links boxes 1 to 9 to HMRC's MTD portal.

Thanks (3)
By AndySCL
to AndySCL
04th Oct 2018 15:14

Thanks Kevin

OK, I understand, and will it be suitable for companies using the FRVS?

Andy

Thanks (0)
to AndySCL
04th Oct 2018 15:25

If your spreadsheet handles FRVS then I recon this will do what you need - to find out for certain download it - it's free.

Thanks (1)
By AndySCL
to kevinringer
05th Oct 2018 08:10

Thanks Kevin

Our accountant was planning to charge £20/month for the service. Maybe worth a try.

Andy

Thanks (0)
By AndySCL
to kevinringer
05th Oct 2018 08:10

Thanks Kevin

Our accountant was planning to charge £20/month for the service. Maybe worth a try.

Andy

Thanks (0)
to AndySCL
05th Oct 2018 09:19

The accountant would likely have to buy licences for bridging software - so there's a cost straight away. Then you'd have to email your spreadsheet to the accountant who would then have to digitally link it to the accountant's MTD bridging software. I guess every client would have their own spreadsheet so the linking process would be different for every client. The accountant would then perform the MTD submission. This all takes time. We're going to offer this service to clients who maintain their own software but don't want to handle the MTD submission. We haven't decided on fees. We offer a similar process at the moment for clients who maintain paper VAT records and who don't have internet and phone us with their quarterly figures and we log into GOV.UK and file. We charge £15 per filing. This sounds a lot for what in theory is a 2 minute phone call but on most occasions the client has a few questions to ask and/or there's a problem with the figures. We'll have to jump through a lot more hoops with spreadsheets so maybe £20 is not unreasonable. It would be cheaper for you to do it because you have the one spreadsheet and once you've linked up your boxes 1-9 with the bridging software and input your user ID etc you're setup for future periods. I'll certainly be encouraging my spreadsheet clients to file their own. My filing service will be aimed at clients who lack the confidence/ability to do their own.

Thanks (3)
avatar
By ShayaG
04th Oct 2018 15:03

This is very welcome news indeed!

Thanks (0)
avatar
05th Oct 2018 09:23

These people are not making it easy for themselves
I tried to tell them about the spelling mistake on the auto reply. so if you go to contact us all you can do is enter details and register for a call back, that I don't want. It also is set up to take American telephone numbers - I struggled with that bit. Because I am not that good with numbers.....

Thanks (0)
to Tom 7000
05th Oct 2018 09:37

That's what I would expect from a company offering free software. I still ask: what's in it for them?

Thanks (1)
avatar
05th Oct 2018 09:44

This free add-on may work initially but down the line when HMRC want transaction data I can't see it being much use.

Thanks (0)
avatar
08th Oct 2018 11:16

I can't see a link to download the software.

Thanks (0)
avatar
to BarryHWhite
09th Oct 2018 10:00

As far as I can see as HMRC have not specified the products yet no one offering a free product has a download yet and all you can do it register you interest -i.e. give them your personal data. So I cannot see much point in registering and will just wait until something can be downloaded.

Thanks (1)
avatar
15th Oct 2018 14:41

"There is no bridging software in the Universe (or Multiverse) that can digitalise cash ; you still have to sit down and count it ".
What about those spare change counting machines that you see in some supermarkets. Maybe retailers should get one and wire it up to their computers to make the cash counting digital.
Do I need to patent something about this before somebody else gets in first with this additional idea for Making Tons of Dosh? (otherwise known as MTD).

Thanks (3)
avatar
By Dandan
to anthonystorey
18th Oct 2018 13:29

anthonystorey wrote:

"There is no bridging software in the Universe (or Multiverse) that can digitalise cash ; you still have to sit down and count it ".
What about those spare change counting machines that you see in some supermarkets. Maybe retailers should get one and wire it up to their computers to make the cash counting digital.
Do I need to patent something about this before somebody else gets in first with this additional idea for Making Tons of Dosh? (otherwise known as MTD).

That's very good. MTD = Making Tons of Dosh. That is what I thought about MTD. I am also thinking about writing excel tools.

As for the machines that count cash outside some supermarkets, they are for coins (those copper coins that will soon be withdrawn from use). Nobody will rely on machines to count £20 or £50 notes. Try asking a market stall trader to use one.

Thanks (0)
avatar
By DMBAcc
02nd Nov 2018 10:17

You couldn't make this stuff up could you? Here we are in NOVEMBER and we only have until APRIL to start inputting onto something NEW to comply with the LAW. Are we all being set up to fail, because that's what it feels like. Really is the Civil Service that incompetent ? or is it sheer arrogance from London Centric civil servants who have never heard of internet/mobile phone black spots and people who have managed to run their businesses AND submit their VAT returns 100% accurate AND on time using manual records they actually understand and from which they can derive some simple business information.
PROGRESS ?!!! HA !!!!!!

Thanks (1)
avatar
to DMBAcc
12th Nov 2018 14:21

I concur with everything you've said DMBAcc and despair the more I hear about it all! Yes free software but there's obviously a hidden agenda. As for already tax complaint businesses ticking along perfectly well but now being forced to file digitally under MTD - how on earth is that going to plug the tax gap?!!!

Thanks (0)
By djn24
12th Nov 2018 16:57

Please correct me if I'm wrong:

For MTD we can take the clients daily totals from the till and input those onto an excel sheet.
Analyse the cash and bank expenditure also onto excel.
Summarise all this onto the relevant boxes and use bridging software to submit it?
No change apart from apparently having to record every single purchase invoice separately which is going to be a PITA.
Are we all going to analyse every single invoice? Seems to me to be unreasonable.

Thanks (1)
avatar
By Dandan
12th Nov 2018 18:57

In case anyone wonders why there is no trial download ,I think it is simply because every developer is afraid that their idea will be copied.

Now that every developer has figured out how easy it is to do the bridging software, no one wants to let on.

Thanks (1)