Making Tax Digital and Using Spreadsheets

24th August, 2018

The initial consultation on MTDfV excluded the use of spreadsheets. Following appeals from accountants and businesses the MTDfV legislation does now permit the use of spreadsheets.

The problem with a spreadsheet is that it doesn’t have the ability to link to HMRC via their API platform. Thus, as a standalone, a spreadsheet will not be compliant with MTDfV. A business will need to use a piece of software that can bridge that gap; connecting digitally both to the spreadsheet and to HMRC.

The spreadsheet exemption is intended for larger business with complex VAT affairs. HMRC are using the legislation to dictate this use of spreadsheets within the VAT return process:

  • A business using a spreadsheet to maintain their VAT records must use formulae to compile the return within the spreadsheet and link it digitally to the bridging software from 1 April 2019.
  • A business using a spreadsheet to collate group company VAT data has until 1 April 2020 to digitally link the group company software to the spreadsheet. It then flows in to the above.
  • A business using a spreadsheet to calculate adjustments to the VAT return, partial exemption for example, does not have to link that spreadsheet to the software and can make the adjustments to the software manually.
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