We recently received this question from a BTCSoftware customer:
I just wondered if there was any more news on MTD. I have clients that were on manual books and records and have managed to transfer to Excel. My only issue is that some smaller clients, who are below the VAT threshold but over £10k, don’t want the extra cost of monthly software packages. What do you suggest?
It’s an issue which accountants up and down the country are no doubt pondering, and so we thought you might find it helpful to see the answer our CEO, Rob Ellis, gave.
Thanks for getting in touch, and I think the best way to answer your query is to explain what we are currently doing and what we are planning to do – but with the caveat that this is all subject to change because of uncertainties with the whole MTD programme.
We are building a new Digital Tax Return module into our Solution Centre. This will enable you to create, submit and enquire upon Update Periods and Annual Summaries for the Self-Employed and Property “Businesses” of your clients.
It will also provide the ability to submit Dividend and Savings information and, of course, produce a tax calculation. Whilst it is still a work in progress (mainly because HMRC haven’t completed the APIs to support this) we demonstrated the Self-Employment part of this at the recent Accountex exhibition and are producing a simple video to show this feature which I can arrange to be sent to you once finalised.
Quite rightly you have concerns over how you are going to obtain and enter the data for the various submissions. We have thought long and hard over this and want to be as flexible as possible so I’ll explain what we are doing for both the Update Periods and Annual Submissions.
Update periods
An Update Period for Self-Employment is essentially Turnover plus Expenses and Disallowables (as per SA103F boxes 17-46). You have to submit one of these at least quarterly for each Self-Employment income stream, and one for Properties which are Furnished Holiday Let (FHL), and one for non-FHL Property too.
The FHL Property Update Period mirrors the SA105 boxes 5 to 9 whilst the non-FHL Update Period is essentially boxes 20-29. As we understand it, an Update Period for Property is a consolidated submission for all properties of a given type (FHL or non-FHL).
This data can be entered in one of the following ways:-
- Manually entered figures
- From transactions entered into our existing cashbook facility knows as Incomplete Records
- Imported from an accounting package such as Xero or Sage
- Imported from an Excel spreadsheet, provided it complies with the format we need (to be defined)
Annual submissions
An Annual Summary represents end of year accounting adjustments such as losses brought forward, capitals allowances, etc. These will mostly be manually entered as they are now into the SA103F/SA105, however, we will also utilise our existing Capital Allowances Calculator to store and calculate the CA related information (purchases and disposals for various pools and asset sets, AIA, etc).
Tools to assist data capture
Further to that, we also plan to provide tools that you will be able to give to your clients to assist them with data capture. Nothing is finalised yet but we are talking with people such as MyFirmsApp and Receipt Bank to provide a simple method for your clients to enter data, which feeds directly to our Making Tax Digital (MTD) module for your review. We are even developing a simple Excel spreadsheet for people to use if they wish, which will also link to our MTD module.
Of course, with everything that’s going on in the political world right now the timescales for MTD mandation are up in the air to say the least. HMRC were supposed to have 12 months of beta testing before anything was mandated. They may just about get that for Self Employment but nothing else.
Certainly Agents can’t test any submissions yet (we have one who is currently going through the registration process but that is all that is available and only to a few Agents) and won’t be able to until mid-July at the very earliest.
If you have further questions, suggestions or need any additional assistance to help prepare as best you can, given the uncertainty surrounding Making Tax Digital, do get in touch with the BTCSoftware team
