Using Spreadsheets with Making Tax Digital
What is Making Tax Digital?
Making Tax Digital (or MTD) is an initiative by HMRC to make the entire process of VAT returns (and later Tax returns) electronic. They want to eliminate careless human error, and make the process as automated as possible. Initially they said that spreadsheets would not be acceptable, but then changed their mind, due to some pressure, and have now said that they are acceptable. They have settled on the fact that spreadsheets can be used to store electronic records, and can be used to submit VAT (and later quarterly Tax) returns. Having said this, they DO have to conform to this important rule:
They have to communicate with HMRC via APIs, WITHOUT copying and pasting or re-typing figures.
This means that your spreadsheet will need to be set up to automatically produce the correct figures, in the correct cells, on the correct tab. Once correct, the spreadsheet can then be uploaded to HMRC, via a third party website or application. This way you are not copying and pasting values to submit, but the values are automatically calculated. This eliminates careless errors.
Please note that at the moment, you need to sign up for Making Tax Digital (even if you are already VAT registered). If you have not signed up, these solutions will not work for you. Please just keep in mind that when you do sign up, the old VAT return portal will not work for you, you will then need to use a MTD solution. We’re not sure what action HMRC will take in the future though, they may force everyone onto MTD at some point.
Why we didn’t create a solution
The truth of the matter is that we did intend to. As soon as I heard about MTD and spreadsheets, I approached a programmer friend of mine, and we discussed making a solution. We did all of the research with HMRC to ascertain what was required, and put a plan together. This took an extremely long time, as we were both doing this in our spare time, and we could not throw endless resources at it. After many emails backwards and forwards to HMRC, we realised the following:
- As HMRC preferred programmed software solutions, their required process was aimed at software. Their spreadsheet option was not clear, and not particularly user-friendly.
- They demanded we follow a process which kept changing each time we made contact.
- In order to complete this solution, we would need to spend time and money that we just could not spare.
We then decided to terminate the project, and search for one which was already done.
Who we suggest as a third party solution
I looked at many solutions for third party software to submit spreadsheet records to HMRC. There are many options out there, but as a spreadsheet specialist, I did not like many of them. I eventually found 123 sheets, and their solution is almost identical to the solution that we planned to make. I suggest 123 sheets as a preferred solution. In fact, the spreadsheets we sell, that are MTD compliant, are set up to be used with 123 sheets.
Why we chose this solution
There are various reasons, here are the main ones:
- Many other solutions require Excel plugins. I flatly refuse to add Excel plugins, as you just don’t know what they are doing. They also have access to ALL your spreadsheets and can affect the way Excel works. This is not an option for me.
- There were other solutions where you had to use a spreadsheet with a macro. This is not the end of the world for most people, but I don’t like using spreadsheets with macros that I have not made. Again, you don’t know what it is doing. Also, you are then locked into using that particular spreadsheet. You may as well use a software package then.
- There were other solutions that would merely use the data from the spreadsheet to populate accounting software. If I wanted that, I would just get the accounting software and populate it directly.
All I wanted was a simple online solution that would accept your spreadsheet, collect the figures for HMRC, submit the figures and reply to you. No plugins, no macros, no accounting software. 123 sheets have done what we wanted to do, so they are our preferred option.
What we do for you
You may be wondering what we get out of this. We don’t get commission from 123 sheets, we just want to make sure that you have the best solution. We love spreadsheets, and we want to help you get the most out of yours. If you would like to use spreadsheets for MTD, but you don’t want to make them, we have added an MTD section to our store. We will start with one solution, and add more as we see a need. Please let us know if you have any suggestions for new products. If you’re interested in purchasing such a solution, take a look at our store, and click on the MTD filter.
If you would prefer a bespoke solution, please do get in touch. Making custom spreadsheets is our main service. Please also note that we do not usually make bookkeeping spreadsheets. Most of our spreadsheets are related to project management, process tracking, CRM, data analysis, or financial analysis. Whatever spreadsheet you may need, please get in touch.
We wish you all the best with your spreadsheets!
Owner of Spreadsheet Solutions