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New MTD lessons:  Spreadsheets – The reports of my death are greatly exaggerated!

Posted by Phil Thornton on 08-May-2017 09:37:57

There’s been a lot of talk in the professional press recently about the use of spreadsheets for digital record keeping with Making Tax Digital. So what’s the latest on this topic?

iStock_89981431_thumb.jpgInitially, we were told that spreadsheets would not be acceptable and dedicated bookkeeping software would be needed.  Following feedback from a huge number of sole traders and small businesses that rely on spreadsheets to manage their business finances, it was understood that they might be acceptable.

We’ve now had clarification on this point, which can be summarised as follows:>

  1. Individuals and businesses can continue to use spreadsheets as a form of digital record keeping.
  2. A spreadsheet could be used to send the data directly to HMRC – if it has the functionality and capability to do so.
  3. When a spreadsheet is being used to maintain digital records, and other software is used to send HMRC the update, the only data that needs to be ported across to that software is the data that will be sent to HMRC.

This will be great news for both advisers and their clients, given that one of the key concerns for advisers has been how to migrate clients currently using spreadsheet onto bookkeeping software. As this is no longer a requirement, advisers can now start to think about how they will work with their clients’ current spreadsheets (if both the adviser and the client are confident and comfortable with them) and what new processes will be required under MTD to submit data to HMRC.

For advisers with clients who are keen to submit their own quarterly returns, but are still using spreadsheets, point two will be of huge interest. Advisers in this situation will find it easier to migrate clients from their current spreadsheet to another with the necessary capabilities, rather than move to full bookkeeping software.

In summary, it’s reassuring that feedback has been both listened to and acted upon and the initial stance on spreadsheets has changed. This will go some way to bring comfort to advisers as they begin the process of preparing their practice, and their clients, for Making Tax Digital.

Phil is Product Manager - Making Tax Digital for Wolters Kluwer Tax & Accounting

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Topics: All posts | Tax | MTD