Making Tax Digital: The pros and cons of bridging software

Making Tax Digital: The pros and cons of bridging software

Making Tax Digital(MTD) is creeping over the horizon, and April 2019 will be here before you know it.

Yet, even with the deadline looming, I’m still being asked about the best way to prepare – especially if you’re using spreadsheets.

Now, in my opinion, making the switch to a fully cloud-based accounting software platform is a no brainer. However, I appreciate that for some businesses, it will be difficult (or downright impossible) to abandon their spreadsheets at this moment in time.

For instance, if your business is: partially exempt and needs to perform complicated calculations outside of an accounts package; part of a VAT group; or using software that’s not compatible with MTD, you willneed to retain your spreadsheets. And to make sure you’re compliant with MTD, you’ll need to use a special piece of software called bridging software.

What’s bridging software?

In essence, bridging software makes your spreadsheet MTD-compliant, allowing you to send and receive the necessary information to and from HMRC. And that’s all well and good for those who have no choice but to continue to use spreadsheets.

But what about those business owners who are simply set in their ways? The ones who aren’t all that confident in switching to a new software platform, and would rather keep their spreadsheets? What are the advantages (and disadvantages) of using bridging software? Let’s find out.

The advantages of using bridging software

  • Compliance– First thing’s first, by communicating with HMRC’s MTD systems, the bridging software allows the relevant info to be sent to HMRC via a spreadsheet. It will essentially replicate the look of a VAT return, and be incorporated into your spreadsheet.

    You will then link the necessary figures to the VAT return boxes, and once complete, you’ll submit the VAT return digitally, keeping you compliant with MTD.


  • Minimal Disruption– By using bridging software instead of switching to a cloud-based accounting software, you will in theory minimise disruption to your existing way of doing things. A minor addition to your spreadsheet is a lot easier to handle than a full migration to a new software.


The disadvantages of using bridging software

  • You’re Missing the Point of MTD!– Making Tax Digital isn’t another HMRC obligation – or rather, it shouldn’t be viewed as such. It’s an opportunity to dive a bit deeper into your business finances and use technology to improve and grow.

    Using bridging software and sticking with what you know might be the least scary option, but you’re doing your business a disservice by not using a compatible cloud accounting system. Switching gives you up-to-date and accurate numbers at your fingertips, and from my point of view as an accountant, that’s a huge win.

    Supported by the cloud, I can help you lower your tax bill via streamlined tax planning, while keeping an eye on real-time data, potential cash flow issues, and opportunities to minimise your liabilities.

    That same level of insight just isn’t possible with a spreadsheet – with or without bridging software.

If you’d like to discuss Making Tax Digital and what it means for you, don’t be shy – Contact me today.