Accounting For VAT With Making Tax Digital

Self employed business can use its own accounting period but the tax position can become more complex if the accounts use a basis period rather than the standard financial tax year.

Making Tax Digital (MTD) Frequently Asked Questions:


I am not VAT registered, does this impact me?

There is no change to your submission requirements if you are not VAT registered at this time.  Making Tax Digital in an ongoing programme and there may be more developments in the future.  DIY Accounting will address those as they are communicated by HMRC.

I am VAT registered but below the £85k threshold, does this impact me?

There is no change to your submission requirements if you are below the VAT threshold, currently £85k turnover at this time.  Making Tax Digital in an ongoing programme and there may be more developments in the future.  DIY Accounting will address those as they are communicated by HMRC.

I am using the Flat Rate Scheme, will this affect me?

This will depend on circumstances, as you don’t need to keep an electronic record of your purchases unless you have capital expenditure goods, in this case you should record them and claim the VAT.

Why do I need extra software?

From April 2019 VAT submissions need to be automated.  For businesses using spreadsheet based software this means you will need bridging software as HMRC will not be providing a solution themselves.

Can I use different bridging software?

There is HMRC requirement to use any specific solution. However, VitalTax has been designed to work specifically with the layout of the DIY Accounting VAT calculations.  It is also listed by the HMRC as a current supplier of VAT bridging software.

What is an Excel Add-In?

An Excel Add-In is a file that Excel can load when it starts up.  It contains code that adds additional functionality to Excel, usually in the form of new functions.  In the case of VitalTax for DIY Accounting it allows you to submit your quarterly VAT return at the click of a few buttons.

Which version of Excel do I need?

VitalTax works for Excel 2013, 2016, 2019 for windows, Excel 2016, 2019 for Mac, Office 365and Excel for iPad.  If you have an older version our recommendation is that you upgrade Excel or use free Excel online version.

How do I get the add in?

The add in is available in Excel.  On the Insert menu click on get Add Ins. A window called office add-ins will appear.  Type in VitalTax and click add.  When using the tool, you will need to select “DIY Accounting – VAT” in the templates window.  This links with the format of the DIY Accounting spreadsheets.  If you’re struggling watch this video.

What if I use Open Office or an earlier version of Excel?

Unfortunately VitalTax doesn't support Open Office or the earlier versions of Excel directly, but you can export your vat spreadsheet as an Excel file by using 'free office online' - you can get it here, please see the following link that helps explain the installation process: Excel Online Guide

Could I get a demonstration before downloading?

A demonstration video is available on YouTube

Where do I go for further support with the VitalTax bridging software?

Support is available by contacting VitalTax directly on their website

Why have DIY Accounting not developed their own solution?

This is something we considered but, to ensure something was ready for April 2019 we decided to collaborate with a small business which already had created a solution.

Are there any more videos I can watch?

Yes, this one is a bit longer and not designed for DIY Accounting but gives a general idea of how it all works.  Happy Watching!

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