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Making Tax Digital for VAT – How Microsoft Excel can help your business

09 August 2019

Published by: Amit Dev - Tax Technology Lead, Indirect Tax


With Making Tax Digital for VAT (MTDfV) live for four months now, we have already gone past the deadline for submission of the first MTDfV returns for businesses that file their VAT returns on a quarterly basis. Prior to submitting your first quarterly MTDfV return, you should have already done the following:

  • Obtained MTDfV-compliant software that is able to submit VAT returns under the new method (could be as simple as an Excel spreadsheet plus ‘bridging software’)
  • Signed up to HMRC’s digital platform
  • Authorised your MTDfV software provider to submit MTDfV returns on your behalf
  • Received your confirmation email from HMRC confirming that you are ready to submit MTDfV returns under the MTDfV regime.

How can Excel help?

HMRC has already confirmed that it views Excel as an integral long-term solution in supporting businesses that make digital VAT returns by using bridging software. Bridging software is software which allows filing of VAT returns by utilising a combination of accounting software and spreadsheet software such as Excel.

In Excel, there are over 400 functions (also known as formulae) and you can even create your own. You can use these functions (and, if you’re an experienced user, a combination of them) to semi-automate and calculate pretty much anything. By using Excel functions your business can save time and effort when submitting digital VAT returns. 

Pivot Tables

Excel’s PivotTable tool is very useful as it allows users to quickly summarise data based on fields or multiple fields. For example, many VAT return preparers:

  • Download data (including: transaction date, VAT amount, net amount and VAT tax code) from an accounting system into Excel
  • Use a range of Excel functions, 'copy and pasting', and 'cut and pasting' to arrive at eg their Box 1 to 9 VAT return figures.

The above process often leads to an unnecessarily complicated spreadsheet. A more efficient process could involve the use of a PivotTable to create a VAT return report. PivotTables can quickly summarise large amounts of data into a meaningful table. Often this can reduce a VAT return Excel workbook of more than 20 pages into a more streamlined 5-6 sheets.

Protected sheets feature

Excel’s protected sheets feature can prevent accidental entries into your workbook – and can be very useful where multiple users/reviewers are working from the same workbook, eg in the new MTDfV world. The feature provides increased security when saving and editing spreadsheets.

How can we help?

BDO’s approach involves meeting you to assess your business’s readiness for MTD, identifying any breaks in the digital journey and working with your IT department to implement the changes necessary to comply with the rules. We can also help you to identify the most suitable independent software package for making the digital upload to HMRC’s system and, if any aspect of MTD proves impractical or unduly onerous for your organisation, help you negotiate alternatives with HMRC.

BDO is also participating in a number of HMRC stakeholder groups on Making Tax Digital and can keep you up to date with the latest developments.

Struggling with MTD for VAT?

BDO can offer a full VAT health check and systems review to help deal with MTD.