Here are some of the key questions we’re being asked frequently by practices:
Will we need to become more engaged with the technical side of accounting applications?
When MTD states that VAT return data must be kept and filed digitally, it means that the software that businesses use must be capable of providing information to HMRC and receiving information from HMRC digitally. The emphasis should not be on the ins and outs of the technical side of the applications as software suppliers should be making this easy.
However, what practices will need to focus on is understanding what they do today – how do you currently process VAT returns on behalf of clients? For example, do you use spreadsheets, do you take figures from one place and type them into another?
Practices will also need to understand whether they can continue to process their client’s return in the same way, or whether they need to make changes to their processes or even look to use a new solution. HMRC has a clear guide that all businesses should read which clearly sets out what can and cannot be done.
What about bridging applications? Stopgap or real alternative?
While the vision of an end-to-end fully digital filing journey is on the horizon, many advisors have significant legacy calculations and formulae within spreadsheets for specific clients that may require some thought and planning.
Spreadsheets are usually used in instances of complexity, where bookkeeping software could require manual adjustment, or in situations where requirements are so straightforward that it’s simply cheaper and easier to use spreadsheets. Either way, when companies or advisors have been using spreadsheets for some time, it’s because they are efficient.
Spreadsheets can still be used in MTD for VAT on the basis that they are used along with software that can be submitted to HMRC digitally. How will it work? A transition to bridging software or API-enabled spreadsheets will be used to digitally submit VAT return data to HMRC when using Excel in the VAT process.
So, Excel can still be used for calculations as long as bridging software or API-enabled spreadsheets are used for submission. Therefore, bridging software is not to be seen as a stopgap, but an important part of the process that will allow companies and advisors to maintain VAT processes as closely as possible with the transition to MTD.
Are the new technical requirements going to change the business/accountant relationship?
MTD for VAT should be seen by advisors as an opportunity to offer new services, to strengthen their relationships and attract new clients.
It’s a great opportunity for advisors to discuss the services on offer, and very importantly, to customise these services to support the differing needs of the client. For example, in some cases clients may want to file themselves, however, they may want advisors to provide a validation and checking service before they do so.
Overall, advisors should get familiar with the solutions they’ll be using to file VAT returns well ahead of the first submission deadline in order to make sure everything is set up correctly. MTD is a real opportunity for businesses and practices alike to streamline filing, and to improve accuracy and save time.
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