It is apparent that several software companies are spreading false information to encourage accountants and their clients to buy new MTD-compliant software. These are some of those MTD myths:
- Spreadsheets will only be accepted for one year. False: HMRC has confirmed that keeping VAT details on a spreadsheet is a valid digital record, and this won’t change.
- The entire VAT accounting system must be held on one software package. False: if there are digital links between different pieces of software or spreadsheets the VAT accounting system can be made up of several software products.
- The VAT software must be cloud-based. False: no aspect of MTD is dependant upon the software being held in the cloud.
- You must upgrade to the latest (expensive) version of software to be able to submit VAT returns under MTD. This is half true as if you want to continue to use only that software product for the accounting function and to submit the VAT return, then an upgrade will be necessary. However, most accounting packages allow you to download the data into a spreadsheet format (CVS) and which can be read by bridging software in order to submit the VAT return.
Don’t rush into buying new MTD software. There are around 100 MTD-compliant products already on the market and another 200 in development, so some of those will inevitably fail or be withdrawn in the future. HMRC is planning to produce a filterable list of the software products it has approved, so you can see which are desk-top based etc. The ICAEW Tax Faculty has attempted list the qualities of most of the MTD products on the HMRC list.
Written by the Tax Advice Network