Changes after 1st April 2021

MTD – Bridging Software is here to stay

From 1 April 2021, businesses using bridging software need to ensure that digital links are used when transferring the accounting data to the bridging software when completing VAT returns.

What does this mean?
‘Copy and Paste’ is no more. But, the linking method shown in our User Guide is completely MTD compliant.

Can I still use spreadsheets?
Yes, yes and yes – VAT Notice 700/22 4.2.1 Digital links states that a digital link includes linked cells in spreadsheets. For example, if you have a formula in one sheet that mirrors the source’s value in another cell, then the cells are linked.

What do I need to do?
If you already follow the linking method as per our User Guide, then no changes will be required. If you currently use ‘Copy and Paste’, then from 1 April 2021, you will need to start using the linking method. You can find out how to do this by accessing our User Guide via the link below.

You should have no problems following the steps in our guide. But if you do have any queries, please feel free to get in touch.

VAT – Domestic Reverse Charge

What is it?
Brought in March 2021, businesses that supply construction services to VAT registered customers no longer apply VAT to invoices. Instead, the customer accounts for the VAT.

The charge applies to standard and reduced-rate services which fall within the scope of CIS and where the customer is not the end user.

Further information can be found here.

What does this mean for sub-contractors?
Subcontractor invoices will no longer include VAT. Instead, there will be a statement on the invoice that should read:

‘Services provided are subject to domestic reverse VAT rules at 20% (or 5%) – Customer to pay the VAT to HMRC.’

You must not enter any output tax on sales under the reverse charge. Only the net value of the sales needs to be entered in box 6.

What does this mean for contractors?
If you are a main contractor receiving a domestic reverse charge invoice from a sub-contractor, you should:

  • Continue to record it as a normal expense invoice and include the input tax in box 4 of the VAT return.
  • The net purchase should be accounted for in box 7.
  • As this is reverse charge, you also need to account for the output tax in box 1 – the overall effect is VAT neutral.
  • Make sure you do not enter the net value of the purchase as a net sale (no entry in box 6).

Please see below for a practical example.

Can you still use bridging software?
Yes you can. Bridging software is simply a tool to send your MTD VAT return to HMRC. The new rules only impact the way you do your invoicing and how the VAT return is populated. How you file your MTD VAT return has not changed.

Different VAT Schemes

We accommodate all VAT Schemes.

FRS, Groups, Partial Exemption, Capital Goods, Margin Schemes, Cash Accounting, Annual Scheme, Retail Schemes, Payments on Account etc can all use our easy to use sheet and software without the need to register or login to our systems

How do I sign up to MTD?

Has your business signed up for Making Tax Digital?

Before you can file VAT returns under MTD, you need to opt in.

Sign UP here

 

Who can use this software and service?

Anyone and everyone, originally devised for small businesses that used paper or spreadsheet to manage their accounts, we have farmers, barristers, engineers, tourist attractions even pension companies and software houses.

We are fully recognised by HMRC as a bridging supplier and are listed as CHM MTD Bridge on the HMRC site directory

HMRC Service Issues

Are you recognised by HMRC?

Yes, we are recognised by HMRC , the solution is listed in the bridging section and is CHM MTD Bridge which links to https://www.chm-software.co.uk

Select bridging in the “software for” section,
We are  listed as
CHM MTD Bridge

How does this solution work?

Our solution comprises 2 distinct elements

  • A Spreadsheet (Excel, Open Office, LibreOffice)
  • A web portal which allows you to logon and submit to HMRC in an MTD compliant way

We have 3 business models

  • Individual Businesses submitting their own returns (£7.50 + VAT per return) payable by Card or Paypal ) on each submission
  • Agents and Bookkeepers submitting on their clients behalf (£1.25 + VAT  per return subject to a £10 + VAT per calendar month payable by direct debit )
  • Charities, unable to pay by card or paypal (£7.50 + VAT per return) payable by direct debit on the month after each submission

What are the timescales for MTD?

What is the HMRC soft landing for MTD VAT?

For the first year of MTD becoming mandatory – VAT periods starting between April 2019 and 31 March 2021 businesses using non-API-enabled software programs do not need digital links between them.

However, if a business uses a bridging product only to submit the boxes 1 to 9 return to HMRC, the transfer of data to the bridging software must be carrier out in digitally.  This could be achieved using a digitally linked VAT calculation sheet, which will then be linked to the add-in submission sheet.

I use software that is pre-MTD, how do I use this bridging software?

Our bridging software works with any Excel spreadsheet. If your pre-MTD software can export to Excel, then our add-in will be able to file your return for you. Be wary that you will need to digitally link (most likely using macros) the exported data to a VAT calculation sheet and then to our add-in by April 2020. Although this exercise shouldn’t be too difficult for those competent in Excel.

How much does it cost to download and file my VAT return?

Our bridging software Excel add-in is FREE to download and integrate with any Excel spreadsheet for both MAC and Microsoft. The filing of the VAT return with HMRC will cost £7.50 + VAT per submission.

Is the filing process safe and secure?

The security and privacy of your data is of paramount importance to us, all transmissions from our MTD compliant VAT Add-in are secure using the latest HTTPS protocols with the highest levels of encryption, we use the HMRC to authenicate all our customers, so we do not store or share any of your private information. Payments are taken via 3rd party payment provider (Braintree). Braintree is a Paypal company and is a PCI level 1 provider , payment may be made via Paypal accounts or using debit or credit card, all payments PCI DSS compliant and we never get to know or hold any of your payment details, your payments are also protected by Paypal buyer guarantee.

What information gets submitted to HMRC?

The only requirement under MTD VAT is the same information that is currently needed, that being the box 1-9 numbers only. Only the box 1-9 numbers can pass through the gateway

How do I integrate the bridging software add-in to my spreadsheet

Download for Free our MTD VAT add-in. If you operate on a quarterly VAT scheme then we advise you integrate 4 of our free add-ins per 12-month period (12 for monthly VAT returns). Simply link up the box 1,2,4,6,7,8 & 9 in each add-in to your VAT calculations sheets for each period, detail each period start and end date and you are ready to go!

Can I use spreadsheet under MTD VAT?

Yes, HMRC have explicitly said that recording businesses records digitally can be recorded in Excel spreadsheets providing that they are digitally linked. In order for a spreadsheet to be complaint with MTD, the initial input of the data in the first instance can be inputted manually. Any further transfer, recapture or modification of that data must be done using digital links. A digital link in this instance would simply be a formula linking a cell from one sheet to another. The use of copying and pasting, or manually creating a VAT return is not compliant with MTD VAT.

Spreadsheets are permitted under the most recent legislation VAT Notice 700/22: Making Tax Digital for VAT Published 13 July 2018 under s 3.2.

When do I need to submit my VAT return digitally?

All UK businesses that are VAT registered with a taxable turnover exceeding the VAT threshold (currently £85,000) unless specifically exempted by HM Revenue & Customs will fall under MTD VAT for return periods starting on or after 01 April 2019.

For those businesses with a VAT return stagger 1 March/June/Sept/Dec, MTD VAT will begin with the first period 01 April 2020 – 30 June 2020 which will be due for filing on or before 07 August 2020.

For those businesses with a VAT return stagger 2 April/July/Oct/January, MTD VAT will begin with the first period 01 May 2020 – 30 July 2020 which will be due for filing on or before 07 September 2020.

For those businesses with a VAT return stagger 3 May/Aug/Nov/Feb, MTD VAT will begin with the first period 01 June 2020 – 30 Aug 2020 which will be due for filing on or before 07 October 2020.