Making Tax Digital Bridging Software

Making Tax Digital Bridging Software – what it is and when to use it

4 min read

Wondering if Making Tax Digital (MTD) Bridging Software is right for you? In this article, we’ll explain what Bridging Software is, why QuickBooks has built its own Bridging Software, and why you might choose it over other MTD-compliant solutions.

What is Making Tax Digital Bridging Software?

Under MTD you must keep all your client’s VAT records in a digital format and submit the VAT return through MTD-compliant software. One way of doing that is to use MTD-compliant software like QuickBooks Online. But there is also another solution – Making Tax Digital Bridging Software.

As the name suggests, this software acts as a ‘bridge’ between a digital spreadsheet and HMRC. In other words, you keep your client’s financial records in a spreadsheet like Excel or Google Sheets. Then, you use the Bridging Software to submit the final figures for each of the 9 VAT boxes to HMRC.

However, for the software to be compliant it must be able to pull these figures from the spreadsheet. There needs to be that digital connection. So you can’t type them in, like you could on HMRC’s VAT portal.

Why did QuickBooks make Making Tax Digital Bridging Software?

Good question! We’ve been working hard to make QuickBooks Online fully Making Tax Digital compliant, so why build Bridging Software too?

The answer is you. We spent a lot of time with accountants and small businesses up and down the country and we learnt two things:

  1. Not all clients are ready to make the switch from spreadsheets – even though that’s their accountant’s long-term goal.
  2. Some accountants have one or two clients on their books with specialist or complex accounting needs which aren’t supported by QuickBooks Online.

For these clients, spreadsheets – for now – remain the path of least resistance. By building Making Tax Digital Bridging Software we’re able to offer accountants a suite of MTD solutions that solve for all their clients, even the tricky ones.

Is the Making Tax Digital Bridging Software separate from QuickBooks Online?

No, the Bridging Software comes as part of QuickBooks Online. When you submit a VAT return to HMRC you can choose between using the standard MTD e-filing process, or the Bridging Software. The difference is, standard VAT e-filing uses data that’s held within QuickBooks, whereas the Bridging Software pulls in the 9 boxes from a spreadsheet of your choosing.

The good news is, that by signing up to QuickBooks you’ll be able to access the Bridging Software and all the other advantages of QuickBooks Online – like sending and tracking invoices and automatic transaction categorisation. So it’s a great way to introduce QuickBooks to clients, even if they don’t use everything at first.

Which QuickBooks MTD solution should I choose for my clients?

It depends on the client. QuickBooks is flexible so you can literally decide every time you come to submit a VAT return! (Although obviously, if you wanted to submit using the standard MTD e-filing you’d need the financial data in QuickBooks already.)

That said, there are some cases where Making Tax Digital Bridging Software is the only solution. Check out this list to find out which type of submission is right for you and your different clients.

Updated as of Feb 6 2019

QuickBooks VAT e-filing QuickBooks VAT bridging
VAT threshold below £85k Yes Yes
VAT threshold above £85k Yes Yes
Annual filers No No
Quarterly filers Yes Yes
Monthly filers Yes Yes
Sole traders Yes Yes
Companies Yes Yes
Partnerships Yes Yes
VAT group No Yes
VAT division No Yes
Standard scheme Yes Yes
Cash accounting scheme Yes Yes
Agricultural flat rate scheme No Yes
VAT retail schemes and margin schemes No Yes
Bespoke VAT retail schemes No Yes
Point of sale retail scheme No Yes
VAT retail apportionment scheme No Yes
Direct calculation retail schemes Yes Yes
Tour operations margin scheme No Yes
The margin and global accounting scheme No Yes
The margin scheme on second-hand cars and other vehicles No Yes
Auctioneers’ scheme No Yes
Domestic reverse charge procedure No Yes
Capital goods scheme No Yes
Personal exports scheme No Yes
Funded pension schemes No Yes
Registration scheme for racehorse owners No Yes
Retail export scheme No Yes
VAT refund scheme for museums and galleries No Yes
VAT refund scheme for charities No Yes
Flat rate scheme Coming soon Coming soon
TOMs scheme No Yes
Partial exemption No Yes

We hope you’ve found this article useful. As you can see, keeping your VAT clients Making Tax Digital compliant doesn’t have to be hard. With QuickBooks you have the flexibility to sort all your clients with one piece of software.

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