Making Tax Digital (MTD) for VAT

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HMRC is changing the way you submit your VAT Returns (although in practice, for users of our Money Manager software, there is very little difference). From April 2019, most VAT registered businesses with a taxable turnover above £85,000 must keep their VAT records digitally and use Making Tax Digital (MTD) compatible software to submit their VAT Returns. More detailed information about MTD for VAT can be found in the ‘Links’ section below. VAT Notice 700/22: Making Tax Digital for VAT, published on 5 March 2019, gives a good overview of the new rules.

This guide shows you how to use our Money Manager software to submit MTD VAT returns to HMRC.

Money Manager 7 Business Edition

Our Money Manager 7 Business Edition software has been used to keep digital records and file VAT returns online for many years. We have now developed the software to make it compatible with the new MTD for VAT requirements.

See HMRC list of software suppliers for MTD VAT

There is no charge for this update as we are providing MTD for VAT capability at no additional cost to existing users of our Money Manager 7 Business Edition software.

 

Setting up Money Manager to work with MTD

Click ‘Help‘ then ‘Program Update‘ from the main menu in Money Manager, and following the on screen update procedure in order to ensure that you are using the latest version of the software. Note: If you see the message “You already have the latest program version” then your copy of Money Manager already includes the necessary MTD for VAT updates.

In order to start using MTD for VAT with Money Manager you must have already signed up to with HMRC to use the new MTD for VAT service.  You then need to tell Money Manager when you wish to use the new service from.

Click ‘Tools‘ then ‘Online Filing Setup‘ from the main menu in Money Manager.

tools-online filing

VAT registered businesses with a taxable turnover of £85,000 or more need to start sending VAT returns in tax year 2019-20 using the new MTD for VAT service. The general HMRC guidance for the majority of business types (see links below) states that “You must follow the rules for Making Tax Digital from your first VAT Return period starting on or after 1 April 2019“.  Tick the box at the top of the screen in order to use the new MTD  service, and click ‘OK‘.

use MTD

Money Manager is now set up to file MTD VAT returns online.

Filing a VAT return

When you are ready to file a VAT return, follow the procedures below. Please note that the first time you do this HMRC require that you grant authority to Money Manager in order to use the MTD system (steps 5 to 10, below). HMRC generally ask for you to grant authority every 18 months or so (or if you change your HMRC ID or password). Once authority is in place, steps 5 to 10 will no longer be required in order to submit a VAT return. You will need your Government Gateway ID and Password (issued to you by HMRC) in order to grant this authority, so please ensure that you have these to hand before proceeding further.

1 – From the main menu in Money Manager click ‘VAT‘ then ‘View/file VAT return online

file VAT return

2– Select the relevant VAT period and click on the ‘Review and submit online‘ button

review

3 – A report will appear showing details of the  VAT return – check that these details are correct then click on the button marked ‘Click here to file this return online

File MTD VAT online

4 – Click on the ‘Start‘ button at the top of the next window

start filing

5 -The first time that you do this a box will appear asking you to grant authority to Money Manager. Select ‘Click here‘ to launch the HMRC website.

MTD VAT

– Your web browser will open a page on HMRC website. You should read the information then click ‘Continue

HMRC Authority

7 Enter the HMRC User ID and Password and click ‘Sign in

sign in

8 – After answering any applicable HMRC security questions you will be taken to the following screen. Click to Grant authority to Money Manager

grant authority

9 – HMRC will issue an ‘authorisation code – click the ‘Copy‘ button to save this code to the Windows clipboard

copy code

10 – Go back to the Money Manager screen (below) and select ‘Click here‘, which will automatically paste the authorisation code into the box. Note: this screen may be obscured by one of the HMRC website windows. If this is the case then close your internet browser in order to display this screen. Click ‘OK‘ after entering this code.

paste code

11 – Money Manager sends this code to HMRC and requests an ‘authorisation token’. (This ‘token’ is stored internally in Money Manager and is valid for a set period of time as determined by HMRC).

12 – Next the program will ask HMRC for a list of open VAT periods (i.e. periods they will accept a return for). If the period you are trying to submit is not in that list then you will get a red cross next to “Checking period”.

13 – Click the ‘Accept‘ button to confirm that the VAT information that you are about to send is true and complete.

VAT declaration

14 – Money Manager will submit your VAT return to HMRC. Click ‘OK’ to view your receipt.

success

15 – Your receipt is proof that the VAT return has been successfully received by HMRC.

MTD VAT receipt

And that’s it! For subsequent VAT returns, whilst your authorisation remains valid, you will not see/require steps 5-10 when filing the return to HMRC.


Problems

If you experience any problems whilst using Money Manager MTD VAT system then please see our MTD for VAT problems and errors guide.

HMRC – Check when a business must follow the rules for Making Tax Digital for VAT

HMRC MTD for VAT Guidance for Businesses

HMRC MTD for VAT Guidance for Agents

HMRC MTD for VAT Stakeholder Partner Pack

VAT Notice 700/22: Making Tax Digital for VAT

FAQ

 – Is the Personal Edition of Money Manager 7 compatible with MTD for VAT? –  No – in order to process VAT you must use the Business Edition of Money Manager 7. If you wish to upgrade then please refer to the FAQ section on our Money Manager page.

 – Is Money Manager 7 ‘Bridging Software’? – No. ‘Bridging Software’ is software that takes existing data (stored in an Excel spreadsheet, or other ‘accounting’ software’ for example), and then submits this data to HMRC in the new MTD format. Money Manager 7 is a ‘complete’ bookkeeping program i.e. you enter all of your transaction data (sales, purchases etc) into Money Manager initially on a day-to-day basis, and then click a button to file the MTD VAT return at the end of each VAT period.

 – Does Making Tax Digital (MTD) affect payroll ? – No, not in the near future. MTD is initially concerned with a businesses VAT returns, and will later be extended to include individual tax returns, which are currently handled through self assessment.

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