Using bridging software for MTD

mills112

Anyone managed to use a bridging software for Making Tax Digital submission yet???

My friend has to do it for the next tax year and so I am helping him look into suitable bridging sofware.

LITRG

Hi OP. While we can't recommend specific software, we have some useful guidance on our website about things to think about when choosing software.

Choosing Making Tax Digital software | Low Incomes Tax Reform Group

We've also written a blog on MTD software which you may find useful.

Making Tax Digital – getting to grips with software | Low Incomes Tax Reform Group

Hope this helps.

mills112

https://forums.moneysavingexpert.com/discussion/comment/82151312#Comment_82151312

thanks. I think come next tax year, there will be a scramble as everyone earning more than £30k qualifying income will be caught in the net and that will include almost everyone as qualifying earnings is calculated before expenses! (something I found out recently) so it is turnover effectively, like the VAT threshold.

I don't fancy the accounting software and prefer the bridging ones as everything is already on spreadsheet so I would prefer to carry on using the spreadsheets, so was hoping to come across someone who has done this for this tax year to see how they found the process as I don't think it is going to be as straightforward as it sounds.

DRS1

There may be some youtube videos on this subject.

If your friend has business account with NatWest then they may want to use FreeAgent which is I think free for NatWest business customers. I have no idea if FreeAgent is a bridging software operator or what it does or how good it is.

One thing I do wonder is whether the spreadsheet your friend uses is actually compatible with the system any of these places use. I believe some of them want you to download their template so what you upload will fit in with their system.

And as for a link with your bank account …..uggh

mills112

https://forums.moneysavingexpert.com/discussion/comment/82151645#Comment_82151645

yeah, i had looked at one and they provide you with their spreadsheets, which you have to populate and that get sent to HMRC. it makes it more difficult if you have more complicated tax, like working in the building industry, where they are taxed differently and also have rental income. the old self assessment was much simpler.

the accounting software ask for a link to your bank so that it creates the income and expense automatically from the invoices / receipts and payments. a bit invasive I think, unless you have a business account.

my friend doesn't have a business account as he works in the building industry as a contractor and has a flat that he rents out so he will need bridging software that can do self employment and rental employment.

DRS1

Well I am not going to be any help on that but I would just say that the self employment and the rental income will be treated as two separate businesses for reporting purposes. I am not sure if that means you can use two different providers to report to HMRC but you would need to keep the two income streams on separate spreadsheets. I think.

Maybe there is a construction industry site or body which could say what is the best software for use by people in that industry?

mksysb

There doesn't seem to be any good software. They are bloated, full of things you will never need and often missing useful features. They are also expensive, so I am going to write my own,

mills112

https://forums.moneysavingexpert.com/discussion/comment/82152061#Comment_82152061

it's not possible to do this as only accredited software are going to be accepted by HMRC. i was looking at a bridging software one a few months ago and although the company stated on their website that they were on the list of those accepted by HMRC, they did not appear to be so when I searched the HMRC database for accepted providers.

I feel HMRC is not taking into account that a one man small band like my friend, who isn't a high earner but his turnover makes him fall into the MTD bracket isn't going to be capable of doing the MTD by themselves like they were able to do with self assessment and paying for an accountant is not really feasible when you are not earning high income as that will eat into your earnings and leave you with very little. the 50k limit this year wasn't too bad but it dropping to 30k and then 20k is just taking the pee in my opinion.

I think HMRC is going to find a lot of people aren't going to be doing any reporting as they have no idea what to do and they can't afford to pay an accountant to do it, even if there were accountants around that could take on the work as the few that I have approached said they only do work for existing clients as they already are struggling with their own clients for the MTD change and so have no capacity to take on any more clients at the moment.

flaneurs_lobster

https://forums.moneysavingexpert.com/discussion/comment/82152061#Comment_82152061

As @mills112 says, that's fine but you'll need to get it approved by HMRC.

Bit like payroll software, you can't just write your own system because you think the current suppliers are too expensive/complicated - if you are collecting PAYE then it needs to be accredited.

mksysb

https://forums.moneysavingexpert.com/discussion/comment/82152440#Comment_82152440

HMRC have a sandbox where you can test your program. Once it is working properly and you get no errors, you just apply to have it registered. I have just done the sandbox stuff so far. I don't need to use it for a couple of years, so I'll have to wait and see how difficult or easy it is to register then.

mills112

https://forums.moneysavingexpert.com/discussion/comment/82152440#Comment_82152440

i don't think you can get accreditation as a lone developer. it has to be a company as they have to go through tough testing procedures for HMRC to approve their software and it can take a long time to get accreditation. the company i was looking at stated they had applied for accreditation many months ago and that they were now fully accredited, but as i said, they weren't on the list of approved providers on the HMRC website so that could be a false statement from the company.

you have to think that HMRC needs to vet these companies stringently as don't forget they will have access to your personal data, and some even have access to your bank account! so i can see a hoard of scammers out there cashing in on this to steal your data. and even the companies that get accreditation, i hope HMRC will do enough security vetting of how safe your data will be kept by these companies before giving them accreditation.