Making Tax Digital - changes to vat returns

RedRabbit

TimmyO said:

for those up on these things: I'm about to voluntarily register for VAT - I already use Xero - any downside to going the MTD route (rather than normal existing quarterly process) from the outset to save having to make changes in a year or so when its compulsory? 

None that I'm aware of.  We are taking the approach that all clients we prepare returns for will be going onto MTD regardless of whether they are over the threshold as it means we only have one system to keep track of.

If you are already on Xero then making the change isn't going to be a huge issue whether you do it now or when you go over the VAT limit.  The only difference will be which part of HMRC Xero submits the return to.  I don't know how Xero are actually implementing MTD yet as we haven't signed up to their beta but, based on other software, all you'll have to do is tick a box in Xero to tell it to us the MTD APIs rather than the old system.

If it was me I'd go the MTD route from the start just so you don;t have to worry about when you are meant to change over.  There are concerns about how robust HMRC's new system is but they are being lenient with late filing fines (note - late filing only, late payment will still be subject to fines) for the first 12 months presumably so no one gets fined for a failure at their end.

TimmyO

RedRabbit said:

TimmyO said:

for those up on these things: I'm about to voluntarily register for VAT - I already use Xero - any downside to going the MTD route (rather than normal existing quarterly process) from the outset to save having to make changes in a year or so when its compulsory? 

None that I'm aware of.  We are taking the approach that all clients we prepare returns for will be going onto MTD regardless of whether they are over the threshold as it means we only have one system to keep track of.

If you are already on Xero then making the change isn't going to be a huge issue whether you do it now or when you go over the VAT limit.  The only difference will be which part of HMRC Xero submits the return to.  I don't know how Xero are actually implementing MTD yet as we haven't signed up to their beta but, based on other software, all you'll have to do is tick a box in Xero to tell it to us the MTD APIs rather than the old system.

If it was me I'd go the MTD route from the start just so you don;t have to worry about when you are meant to change over.  There are concerns about how robust HMRC's new system is but they are being lenient with late filing fines (note - late filing only, late payment will still be subject to fines) for the first 12 months presumably so no one gets fined for a failure at their end.

cheers @RedRabbit ;

TimmyO

TimmyO said:

RedRabbit said:

TimmyO said:

for those up on these things: I'm about to voluntarily register for VAT - I already use Xero - any downside to going the MTD route (rather than normal existing quarterly process) from the outset to save having to make changes in a year or so when its compulsory? 

None that I'm aware of.  We are taking the approach that all clients we prepare returns for will be going onto MTD regardless of whether they are over the threshold as it means we only have one system to keep track of.

If you are already on Xero then making the change isn't going to be a huge issue whether you do it now or when you go over the VAT limit.  The only difference will be which part of HMRC Xero submits the return to.  I don't know how Xero are actually implementing MTD yet as we haven't signed up to their beta but, based on other software, all you'll have to do is tick a box in Xero to tell it to us the MTD APIs rather than the old system.

If it was me I'd go the MTD route from the start just so you don;t have to worry about when you are meant to change over.  There are concerns about how robust HMRC's new system is but they are being lenient with late filing fines (note - late filing only, late payment will still be subject to fines) for the first 12 months presumably so no one gets fined for a failure at their end.

cheers @RedRabbit ;

by way of update - I managed to get myself registered for MTD via the HMRC - the process was mostly painless - the only slight faff was that my HMRC account didn't seem to pick up some of the stages of registering for VAT, then for MTD immediately and needed a day or 2 to make sense and agree with itself after each step. Once past that, activating MTD in Xero was simple and it looks like it's all ready for me to simply hit 'file' at the end of this month. 

The filing screen doesn't let you set dates - it gets those from your HMRC account so I need to do a manual adjustment for my first return I think (some VAT payments I made in the few months prior to registration) so fingers crossed that it all works ok once I hit the button 

RedRabbit

Yeah, it's always best to leave HMRC's systems a day or two to catch up with any changes you make. 

As long as the pre-registration transaction have been posted with VAT on them in Xero it should pick them up when it calculates the return.

SteveRobinson

hywelg said:

My problem will eventually be the software. I really object to a monthly rental, that's just being held hostage. I want a product I can manage locally, no cloud bollocks, and maybe pay an update fee for tax changes etc. 

I use Xero which really has improved my quality of life so much. Well worth the £25 a month fee.

Being cloud-based means I don't have to worry about a hard-disk failure, I can access it on my phone.

TimmyO

RedRabbit said:

Yeah, it's always best to leave HMRC's systems a day or two to catch up with any changes you make. 

As long as the pre-registration transaction have been posted with VAT on them in Xero it should pick them up when it calculates the return.

It doesn’t - the return shows only those amounts in the date range. And you can’t manually adjust the date range. 

I can run a VAT reconciliation report in Xero with manual dates and that picks them up, so it looks like I’ll need to manually add that amount as an adjustment  to Box 4 which looks simple enough to do 

RedRabbit

I'm about to head out the door but I'll have a look at this for you tomorrow. I don't really use Xero from a bookkeeping point of view but there really should be a way to get the older transactions onto your return. If there isn't it's a huge oversight on Xero's part.

Edit - mobile site messed up the quoting!

TimmyO

RedRabbit said:

I'm about to head out the door but I'll have a look at this for you tomorrow. I don't really use Xero from a bookkeeping point of view but there really should be a way to get the older transactions onto your return. If there isn't it's a huge oversight on Xero's part.

Edit - mobile site messed up the quoting!

that's very kind of you - thanks.

It's possible I've missed something, but I did nose around trying to see how you'd accomplish it and couldn't see a way. 

It also appears that if you add an adjustment, then want to amend that adjustment, you can't. eg I entered the wrong manual adjustment, and had to then add a second negative adjustment to correct it - pfft. So yes either Xero is still a bit clunky in this area, or I'm being particularly dumb (both are possible) 

RedRabbit

https://central.xero.com/s/article/The-VAT-Return#MTDVATreturn

Pre-MTD there was a tick box to include late claims but this is gone once you start doing MTD returns. Late claims should now be automatic provided previous returns included late claims.

I'm guessing that it not working for you is a quirk of it being your first return and being an MTD return. You probably will have to put through a manual adjustment to make the claim. 

Be careful on your next return though - because it's a manual adjustment the pre-registration expenses won't have been flagged as included on a return so may well end up being included as a late claim on that return so you may need to do the equal and opposite adjustment to avoid claiming anything twice. 

TimmyO

Cheers. Yes I’ll watch out for that on the subsequent one - thanks