Digital Accounting using Spreadsheets

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All businesses within MTD must keep records and file returns using ‘functional compatible’ software. Functional compatible software is a programme or set of programmes, products or applications which must be capable of:

• Recording and preserving digital records.
• Providing to HMRC information and returns from the digital records using HMRC’s API platform.
• Receiving information from HMRC using the API platform.

Digital records can be kept in a number of compatible digital formats. The most common and simplest to use are spreadsheets.e.g. Excel.

Submission of the VAT return

The current system of typing figures for the VAT return into the HMRC portal will soon be withdrawn. Instead software will be needed to collate the information required, prepare the return and send the return to HMRC via the HMRC API.

Data will have to be transferred from your accounting software to your VAT working’s spreadsheets electronically by a ‘Digital Link’.

Digital records

MTD regulations require certain records and information to be kept digitally.  Collectively these items are called the “electronic account” and they include:

Your details:

• your business name
• the address of your principal place of business
• your VAT registration number

Supplies made (sales):

• The date of supply
• The value of the supply
• The rate and amount of VAT charged

Supplies Received (Purchases)

• The date of supply (tax point)
• The value of the supply (including any VAT that is not claimable)
• The amount of input tax to be claimed

Summary data

This is the link - or audit trail or VAT account - between the records and the VAT return. This is the information which will be used by the functional compatible software to complete the return.

Whilst the above transactional detail must be kept in digital format, the invoices themselves (both sales and purchase) need not be.

So a spreadsheet in a simple format with a sheet for Purchases and a sheet for Sales and a sheet of summary data which collates the figures needed for the VAT return is an acceptable form of digiltal bookkeeping. Along with our VAT Bridging software which provides the digital link between your accounting records and HMRC the use of spreadsheets is fully digital and compatible with HMRC requirements.

VATbridge123 will collate and prepare your return for you. It will then show the return to you and ask you to declare that it is correct and confirm that you want to submit it to HMRC. Once you have submitted your return you will receive confirmation through your software that it has been received

If you currently use a manual hand written system of book keeping you will need to start recording your transactions on a spreadsheet. You will be surprised how easy it is! No more adding up as the spreadsheet does it for you!

On request (when you sign up) we will send you a sample spreadsheet which includes the summary data digitally linked to the relevant parts of the spreadsheet.