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:
Not all clients are ready to make the switch from spreadsheets – even though that’s their accountant’s long-term goal.
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.
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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.)
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.