US software developer Avalara is set to disrupt the market with the launch of a free Excel extension for Making Tax Digital for VAT which will allow companies to upload Excel data directly into HMRC's VAT filing API using a Microsoft Add-In, reports Sara White
Avalara is the first software developer to produce an entirely free software tool to enable reporting under Making Tax Digital for VAT, meeting a gap in the market created when HMRC said it would no longer allow direct keying in of VAT numbers or any direct Excel uploads when digital reporting becomes mandatory.
HMRC will not be providing any free software for Making Tax Digital reporting for businesses and sole traders, and all the major UK software providers have stated since the outset of the HMRC digitisation project that they will not provide free software, despite HMRC’s initial claims that there would be two or three free software options.
The Avalara software extension, MTD Filer, is a free Microsoft Excel Add-In to help businesses and charitable organisations of any size file their returns in accordance with the new HMRC obligations for digital reporting of VAT.
It will be available from early November 2018 and will be free of charge for all users, regardless of whether they are existing clients, and the MTD Filer tool can be downloaded free of charge and installed for any version of Microsoft Excel, including Office 365.
The Add-In enables both sending and receiving data from and to HMRC via API [application programme interface], making it straightforward for a business to file its VAT returns, and retrieve filing obligations, liabilities, and payment history.
The tool will be available as a straightforward free download which a business can then to its existing VAT data, and click ‘File’ within the tool to submit. Ongoing support and patches will be available.
Richard Asquith, VP global indirect tax at Avalara, said: ‘MTD for VAT will affect two groups most who have been filing manually: mid and large-sized companies with complex or Group VAT returns; and the many micro-businesses relying on Microsoft Excel or manual records.
‘We realised that this gap [free software] could be solved with a relatively basic tool. Unlike in other markets like Spain where digital VAT reporting is already far advanced on the relatively basic UK option, and Italy where it is being launched in January 2019, HMRC has provided no free software or an interface.
‘HMRC has just hoped that someone would come in to breach that gap – there are tools out there in the market, but the majority of software developers have seen Making Tax Digital for VAT as an upsell for their current clients or an extension of existing accounting software.’
There are currently 2.66m VAT registered businesses in the UK and only 12% of those file through accounting software, according to HMRC.
A straw poll at an Avalara summit yesterday found that only 9% of the companies present, ranging from SMEs to enterprise level, were ready for Making Tax Digital.
Avalara is one of HMRC's accredited software suppliers list for Making Tax Digital.
Report by Sara White