As HMRC continues to embrace the digital age, we're all getting to grips with new tax-related tech. In this regard, VAT bridging software is an absolute game-changer – but is it compatible with Making Tax Digital? In this article, we give a concise overview:
What is MTD? What is bridging software? Most importantly, is bridging software compatible with MTD? Read on for the low-down on MTD bridging software!
What is Making Tax Digital?
Making Tax Digital (MTD) is HMRC’s initiative to digitalise the UK’s tax system. MTD has been rolled out gradually over the past years and more updates are set to come. According to HMRC, Making Tax Digital aims to simplify tax compliance and minimise human error.
It is hoped that MTD will help to reduce the tax gap (the gap between expected and actual UK tax revenue). In turn, this would provide the UK government with increased public income to spend on public services.
From this angle, we could argue that using tools like MTD bridging software can indirectly help to fund public services, benefiting everyone in the wider community. But what exactly is bridging software?
What is bridging software?
Bridging software is a way to connect data between multiple systems. In the context of UK tax, this is typically known as MTD VAT bridging software for Excel. Essentially, you can connect your existing Excel bookkeeping with HMRC’s VAT system.
This is useful because Microsoft Excel is not inherently MTD compatible. By using bridging software, you can carry on using your existing Excel-based bookkeeping while also complying with MTD requirements for your VAT Return. In essence, it "bridges" the gap between Excel and HMRC.
At AbraTax, we have been providing Making Tax Digital services for years. One of our essential MTD tools is MTD bridging software for VAT. By downloading our simple VAT Return bridging template, you can easily digitally link your VAT data and submit your VAT Return directly to HMRC!
Is bridging software compatible with MTD?
Yes. Our bridging software is 100% compatible with Making Tax Digital. In fact, it's a great way to stay compliant. This is why it is often called “MTD bridging software”.
Since our bridging software connects the data from your Excel spreadsheet using digital links, it is totally MTD compliant. This is because digital links avoid the need for any manual manipulation (e.g. copying and pasting) of data.
Why are digital links compatible with MTD?
According to HMRC, digital links allow you to maintain a clear “digital journey” from your Excel spreadsheet to your VAT Return. Not only do digital links save you a lot of time spent copying and pasting: they also greatly reduce the risk of human error.
As such, the digital links used in Excel bridging software are an MTD-approved method for transferring data. After linking only seven Excel cells (with two more figures automatically calculated), your bridged VAT info is ready to submit to HMRC.
Conclusion
Who knew that tax compliance could be so simple? In essence, VAT bridging software for MTD is a fantastic way to prepare and submit your VAT Return for HMRC. It’s super quick, simple and extremely cost-effective. Best of all, bridging software is totally compatible with MTD!
If you’re ready to make tax simple, register with AbraTax today and file a VAT Return for free!
Furthermore, are you interested in the best Self Assessment software for individuals? Check out our free Self Assessment service for speedy and smooth ITSA now!