Do you need a solution for submitting your VAT Returns when Making Tax Digital comes into force this April?
There are three options as as I see it, so whats going to fit your business?
To be able to submit VAT Returns to HMRC and be compliant.
Firstly, let’s get down to the basics of what MTD is doing.
You have to send the 9 values that make up the VAT Return to the HMRC’s system and to be able to receive messages back from them. That’s a very simple way to explain it.
For full details please go to the HMRC link Here
So, we have three ways to go.
1. Change completely from say Sage to Xero,
2. Upgrade your current software to the latest version that includes the MTD function.
3. Use “Bridging Software”,as it takes on the role of sending the VAT data from you into the HMRC system.
So, let’s just take you through those three options.
Changing Your Current System for a New One.
Obviously, it depends what you’re working with now and how much of a job it would be to change. But from my past experience changing your accounting software without proper planning could well be jumping from the frying-pan into the fire!
The only reason I would go down this path at this short notice is;
- Your current system is failing already and you just need to start from scratch.
- The system your using is no longer going to be available or its to be withdrawn.
- You’re just starting out and moving wouldn’t make much difference.
Upgrading to a New Version of Your Current System.
This on the surface seems to be the best answer and in many ways it is. But do check the following.
- If its a desktop application like Sage, the new version may require you to install updates on to your systems. That doesn’t sound too bad, but if your systems are not being kept up to date that can bring more issues.
- This really expands on how old your current system is, it may fall into the category that all your hardware could have to
changedjust so its able to run the new version. Be careful before you sign up that you have checked your current systems and they can actually run it.
My advice here is to conduct a hardware audit before making the jump it could save you a big bill!
This is your final option. What is “Bridging Software”. it’s a program that can take data from one system, process it and pass it on to the destination system.
In the case of MTD, the data for the VAT return consists of nine values, so the Bridging Software has to receive that data and then have the ability to transmit it to the HMRC system.
Once its been received by the HMRC you need to have a receipt for the successful submission of the VAT return.
For all those that fall into the category of not sure what to do, this can act as a stop gap or it can become the permanent method.