Have just attended a webinar with HMRC ref Making Tax Digital.

They stated to ask current software provider the following:
Will your software being MTD enabled?

Can you advise the situation with Solar as I would be loathed to change?

Hello MM Bookkeeping Services,

We're still evaluating MTD and haven't yet decided to support it.

If we decide not to support MTD it would not be a big problem - it would simply mean you have to copy the Profit and Loss figures from Solar Accounts into an HMRC-approved website every 3 months (ie. a similar approach to the way you currently submit VAT returns).

Regards,

Hi Mark,

According to webinar just copying the figures will not be acceptable.
The software must be MTD enabled so it engages with Agents API Service apparently.
Absolute nightmare and even HMRC are not ready and can't give answers to the simplest of questions put to them!

Hi MM Bookkeeping Services,

Let me clarify: The "HMRC-approved website" I mentioned would be a third-party website which would be MTD enabled and fully comply with HMRC requirements (including use of the Agents API service). So far we haven't seen any documentation from HMRC that would prevent you copying figures from Solar Accounts to such a website.

Regards,

Hi Mark,

Here is a section of Q&A at webinar with HMRC ref MTD reporting.

"What happens if I don't currently use software? Making Tax Digital for Business will mandate the use of software to provide business income updates to HMRC. The very smallest businesses will be exempt and therefore able to provide updates through their Digital Tax Account. However, we expect agents providing updates on behalf of clients to do so through software products."

The list is too big to put on here but I can assure you that HMRC are stating that the software must be able to link up with HMRC to be able to send the necessary reports quarterly.

Hi MM Bookkeeping,

Yes there's no doubt you will have to use software to link up with HMRC and send the necessary quarterly reports. If by then Solar Accounts doesn't support MTD then just use any other software which can submit the MTD quarterly reports. Every three months you take the P&L figures from Solar Accounts and enter a single journal entry into the MTD software and press 'Submit'. Wouldn't that work?

Regards,

Hi Mark,
Apparently what you suggest will not be feasible as this is what you can do now for anyone under the Vat threshold when submitting tax return.
.
HMRC want to be able to see the information which makes up the P&L.

How they are going to have the time to do all that when they can't get things right now is beyond me!

Hi Marilyn,

Hmmm that's interesting. Where did you hear that they want more information than just the P&L? Is there are webpage you can link to?

Regards,

I've been using Solar for 7-8 years now and whilst I know there remain uncertainties about MTD, I need to make a choice soon about whether to continue with Solar or start using a package that is already approved so I am familiar with it to start MTD reporting. I think Solar is great but really need to know your commitment to these changes.
Thanks

Hi Fran,

I think it's unlikely we will make a decision about MTD in the next few months - sorry. If you want to test MTD reporting right now, we recommend you pick a software package that supports MTD, then create a quarterly journal entry based the Profit and Loss figures in Solar Accounts, then submit the report to HMRC using the MTD software. You can continue to use Solar Accounts for all accounting functions except submitting reports to HMRC.

Regards,

Hi Mark,

Sorry can’t give you any webpage link ref this as I have read so much and been on so many webinars my head is bursting!

However, here is a link to AWeb with latest update and member responses:

http://www.accountingweb.co.uk/tax/hmrc-policy/mtd-taxpayers-must-make-six-submissions-to-hmrc

Regards,
Marilyn

Hi Marilyn,

Thanks for the link - that is very useful. I will look into it further.

Hi Marilyn,

You may be interested in this page from HMRC:
https://www.gov.uk/government/publications/making-tax-digital/summary-of-consultation-responses

To quote the most interesting parts:

"businesses will now be able to continue to use spreadsheets for record keeping, but they must ensure that their spreadsheet meets the necessary requirements of Making Tax Digital for Business - this is likely to involve combining the spreadsheet with software"

"businesses eligible for three line accounts will now be able to submit a quarterly update with only three lines of data (income, expenses and profit)"

"free software will be available to businesses with the most straightforward affairs"

"the requirement to keep digital records does not mean that businesses have to make and store invoices and receipts digitally"

So it seems to me that many businesses will continue to dump their invoices and receipts in a shoebox, then each quarter they will use a spreadsheet to calculate the total income, expenses and profit, then copy these three figures into to the free software for submitting the quarterly return.

Regards,

Hi Mark,
I had already seen this on HMRC website and you will note it states 'updated 08 March 2017'.
My initial question to you was on 28 March after attending a webinar which made totally different statements from the ones you have highlighted!
Anyway, all this MTD rubbish may not even start for small businesses below Vat threshold if Jeremy Corbyn gets his way:

http://www.accountingweb.co.uk/tax/hmrc-policy/9am-lowdown-corbyn-promises-to-ease-mtd-burden

We live in hope!

Hi Mark,

I have been following the debateon MTD in the accounting forums.
The overiding impression is that there is very little definative, objective information released to the public at the moment causing large amounts of speculation.

From comments from some software providers on AccWEB HMRC would seem to be engaged with software providers and there seems to be a trial scheme imminent, one assumes that these persons/organisations have more of an insight to the future possible format and scope of MTD!
From your comments I would take it that Solar is not involved in any collaboration/trials?

You quote from an HMRC source:"businesses eligible for three line accounts will now be able to submit a quarterly update with only three lines of data (income, expenses and profit)"

The operative phrase above is: 'businesses eligible' - a throwaway soundbite!

So what is likely to be eligible?

In my view not much.

For sole traders submitting a self assessment three line accounts(TLA) are allowable for those with low turnover - pegged somewhere in the region of VAT reg threshold if I recall correctly - so I guess that would be a reasonable expectation for simple businesses?
Limited companies have a much more regimented requirements well in excess of TLA and to expect MTD to accept less than currently provided in returns and Companies House submissions would seem foolish.

I run a (micro) company that I see as small fry in the overall scheme of things - 2 employees plus subbies with turnover edging towards 0.5m - VAT registered obviously. Our finacial matters are pretty straight forward, we don't engage in any clever tax efficiency schemes and so Solar suits us just fine from the perspective of accomadating our bookeeping requirements but I can't think there is any way that MTD is going to allow me to submit TLA!

MTD is coming in one form or another like it or not (just like online software packages :-)

Your approach may be okay for the shoebox brigade but surely by definition they are not your customers?

As an outfit that is verry likely going to have to adopt full scope MTD when it comes about, it makes no sense to be using incompatible software and I can only think that this is even more important for your bookeeping clients like Marilyn!

I imagine the additional workload to be similar to that we have running PAYE RTI and the mucking about that that involves to tie in with Solar, if MTD involves similar lack of integration then it may be difficult to avoid the conclusion that we have outgrown your product's target market.

Have you ever considered extension modules for the product that can be added on for additional subscription?

Regards

Hi Simon,

Yes there is little objective information about the MTD requirements, and what there is keeps changing. My comment about a shoebox and spreadsheet approach was to highlight the fact that HMRC is no longer insisting that original records of each transaction be recorded in MTD software. It is therefore likely that HMRC will allow users to record transactions in Solar Accounts and copy the figures to MTD software every 3 months.

No, we haven't yet conducted any trials that involve real users or businesses. Yes, charging an optional extra MTD features is an option - but we need to consider whether most users will just say, "Why should I pay extra money when I can just copy and paste the figures into this free MTD software?"

If your business is not eligible for three line accounts it seems you will probably have to submit a return similar to a Profit and Loss report with each line categorised according to an HMRC list of categories. Our view is it will take about 10-15 minutes every quarter to copy and paste the figures and select the appropriate category. (Note this is the extra time needed - not the total time to submit a return). Of course this estimate could change as HMRC publish more information about the requirements.

Solar Accounts has always been about simple data entry and quickly producing financial reports and documents. So far we have avoided HMRC integration features such as (a) submitting corporation tax returns in xBRL format; (b) submitting VAT returns directly to HMRC; and (c) adding payroll features and RTI integration. This has allowed us to focus on keeping the software simple and developing other features which we think are more useful for our users.

At the end of the day what matters is: How much extra time would you save by having MTD features integrated into Solar Accounts versus copying figures to other MTD software. If this takes a few minutes each quarter then we will probably not add MTD features. If it significantly time consuming then we are more likely add these features. For now, we don't know the answer.

​Cheers,

For anyone who is interested:

http://www.accountingweb.co.uk/tax/hmrc-policy/mtd-law-shelved-in-wash-up