Bridging software will enable businesses to make MTD-compliant VAT returns – even when transaction data is still held in Excel and the business has not begun using fully-fledged financial management software in advance the MTD implementation deadline.
It will also provide a solution for businesses who are using legacy software that will not be MTD compliant.
We have known all along how important it would be for accountants to try out bridging software in advance of the MTD implementation deadline. A QuickBooks survey of 500 small businesses towards the end of December revealed that while a majority (59%) had begun keeping records within financial management software, a full quarter were still using Excel.
Benefits of digitalisation
For many of those businesses, MTD presents a fantastic opportunity to transition to dedicated software and realise the full benefits of digitalisation: better cash flow management; significantly less time spent on admin; and increased peace of mind about the financial health of their companies.
For some, the transition to digital record keeping within dedicated software won’t be fully complete by April. Nevertheless, accountants need to be ready to keep their clients on the correct side of compliance, and be able to recommend the right interim steps to take that deliver best value for their clients’ businesses.
After all, 40% of businesses who were not yet compliant with MTD would approach their accountant for advice in the first instance.
This is where the need comes in for a high-quality bridging solution that enables processes to remain as close to the status quo as possible for now, whilst also making it easy to transition to dedicated software at an appropriate point in the future.
Not a stopgap
Our accountant customers were telling us it couldn’t feel like a stopgap. That task isn’t as easy to deliver as it sounds. Businesses build Excel sheets to track expenses and calculate the values for each of the VAT return’s nine boxes in very different ways.
But it wouldn’t keep with the core principle of helping accountants and their clients make as few changes to existing processes as possible if we started asking people to change their spreadsheets to one single format that suits us.
Equally, we couldn’t start creating an add-on piece of software that lives within Excel. That wouldn’t fit with the
idea that it has to be as simple as possible to transition to full financial management software and obtain all
the benefits of fully digital record keeping.
So what should we do? Think inside the box. Well, nine boxes as it happens.
Jon Taylor, Cloud Accounting Manager at Harris+Co Chartered Accountants in Barnsley has been part of the customer testing team for a number of months, helping QuickBooks to define and refine the bridging solution. He was also the first person in the UK to submit a client’s live VAT return via the QuickBooks bridging software.
Jon said: “The software guides you through the process, alerting you to actions you need to take and preparing you for a fully digital future without the fuss.
“I’d encourage any accountant who’s starting to have sleepless nights about transitioning all their clients in time for the MTD implementation deadline to take a look at this solution.”
We realised two things. First – however someone’s spreadsheet is designed and structured, somewhere within it there will be a cell that says something very closely resembling ‘Box 1’, and in an adjacent cell there will be a value for Box 1. Second – in every use case we have seen, the values for the other nine boxes are somewhere adjacent.
Listening to customers
Those two realisations mean that within the QuickBooks bridging solution, there is almost certainly going to be no need for your spreadsheet to change at all. You simply upload it into a portal within the QuickBooks product and identify the sheet that contains the nine box values. The software then parses the content of the spreadsheet, discarding any personal data that’s not needed for the VAT return.
All that you need to do is cross check that the identified cells and values in the resulting prepopulated form reflect the return you were expecting to make. If it does, click submit and you’re done. In the rare cases it might not, simply tell the software where it ought to have looked.
For those of you who have spent time reading the MTD legislation and know there are supposed to be ‘no manual interventions’ in submitting the final VAT return – there’s no need to worry. As far as the MTD API is concerned, any final corrections you make will be considered as happening within software, and not as a manual intervention.
So what have we learnt? Listen to your customers. Build the solution they need; not the one you want. Be humble.
- Accountants will be able to use bridging software within QuickBooks for no additional cost from February.