MTD – We use Excel not Digital Software. How does this affect my business?

From the 1st of April 2019 it will become mandatory to keep your records digitally and submit your VAT Returns to HMRC using MTD-ready software.

Excel

While a spreadsheet is considered a valid digital record, you will need to ensure that this is either API enabled (that is, it can submit your VAT return to HMRC via an API link using what HMRC calls “bridging software”) or it has a valid digital link to other MTD-enabled software.

Copying and pasting from spreadsheets into your financial software is NOT permitted under MTD for VAT – however HMRC is allowing copying and pasting from spreadsheets for just one year as of April 2019. This is only a concession to allow businesses sufficient time to update their processes and should not be relied upon as one of your accounting processes.

MTD for VAT does not stop you creating paper-based notes or invoices, but the invoice detail description of sales must be transferred into your MTD-compatible software at some point. For example, it will no longer be legal to simply enter the monthly total of all invoices into your digital software. While there’s no requirement for the MTD-compatible software to issue the invoice, it is surely more efficient to simply issue the invoice directly from accounting software.

For more about MTD please see our other FAQ’s on Making Tax Digital