How To Use Spreadsheets To Submit VAT For Making Tax Digital

Making Tax Digital (MTD) for VAT officially came into force on 1^st April 2019. However, for many the first MTD for VAT return isn’t required until 7^th August 2019 – and this is only for those whose first VAT period ended 30^th June 2019.

You’ll need to know about VAT for MTD if your turnover is over the current VAT registration threshold (£85,000 for 2019/20). Otherwise, you risk being penalised.

An introduction to VAT for MTD

A basic summary of this first phase of MTD is that it makes submitting VAT an entirely digital experience – and through HMRC’s very specific path. Instead of paper returns or using the government’s tools, bookkeeping or bridging software is required.

Whilst spreadsheets were not technically in HMRC’s ‘digital vision’, they ultimately decided (after much lobbying) that they will be allowed for MTD VAT record-keeping. For some, this makes getting to grips with digital filing much easier.

However, there’s a catch: a compatible bridging tool is necessary to file in the correct format. We explain what this software is, along with how exactly you can go about using spreadsheets to submit VAT, below.

What are the benefits of using spreadsheets for VAT?

You can take advantage of MTD spreadsheets in a number of ways.

Familiarity

Spreadsheets allow you to maintain your current processes. MTD is a big change, and using a familiar tool can ease you in.

Flexibility

They also accommodate your needs – whether you’re an accountant filing for multiple clients using specific formulae or a business owner doing your own taxes. They make VAT calculations much more straightforward, and you can pull these through to HMRC compliantly via bridging software.

Simple transfer

 As your current practices can continue, the transfer of information through bridging software is incredibly simple.

How do you use spreadsheets for filing VAT returns?

Using spreadsheets to submit VAT is simple – you just employ their functionalities as you currently do. All HMRC require is digital VAT records and calculation in your spreadsheet – the information is then passed to the bridging software digitally and onwards to HMRC.

These tools quite literally ‘bridge the gap’ between your spreadsheets and HMRC.

You’ll need to input the same type of data as you have for previous returns, such as:

• Time of supply (tax point)
• Value of supply (net excluding point)
• Rate of VAT you charged

You should also share information about your business. For example:

• Business name
• Main business address
• Your VAT registration number
• Details of any VAT accounting systems you use

After this is entered, you’ll just need to make sure you use bridging software that’s on HMRC’s approved list of suppliers, like GoSimpleVAT.

Why is it important to follow VAT for MTD?

It’s a good idea to submit your VAT digitally, whether or not you’re legally obliged to. As well as avoiding potential penalisations later on, it offers a number of benefits.

Preparation

If your turnover doesn’t currently exceed the VAT threshold, you could voluntarily register anyway and choose to file returns digitally.

On top of this, whilst you may not need to submit electronically right now, you might have to do so for other tax returns in the future. There are plans for both Income and Corporation Tax to be brought into the new digital age, potentially from as early as 2021.

Making Tax Digital advantages

Along with getting ahead, you may also take this as an opportunity to review and potentially streamline your accounting. This will minimise the time spent on your VAT returns, making all processes significantly more efficient and simpler.

You’ll find it easier to keep on top of your record-keeping, giving you a better picture of your finances. You can then understand how you’re performing and make data-driven decisions based on this.

Staying on top of MTD for VAT

So long as you choose compatible tools, and also submit your VAT returns on time, then you’ll be able to maintain HMRC’s digital path compliantly and with ease. Make sure you know when your first quarterly period was from 1^st April 2019, and the deadline to file digitally by.

As spreadsheets are so simple and offer numerous benefits, using bridging software like GoSimpleVAT is ideal. It’ll help you avoid any penalties and take advantage of the digitalisation of tax.

Our tools digitally link to HMRC so you can submit MTD for VAT returns. You can also import your reports from any spreadsheet or PDF, and we provide peace of mind with our industry-leading data security.

There are easy-to-understand dashboards too, and our software can be accessed from your mobile. Discover more about GoSimpleVAT by getting in touch with our team today.

Last updated on 25th July 2019.

Our One year to go! Prepare for Making Tax Digital for VAT now to avoid penalties article may be of interest

Blog content is for information purposes and over time may become outdated, although we do strive to keep it current. It's written to help you understand your Tax's and is not to be relied upon as professional accounting, tax and legal advice due to differences in everyone's circumstances. For additional help please contact our support team or HMRC.