Making Tax Digital update
In July 2018, HRMC published a new VAT Notice for Making Tax Digital for VAT (MTD for VAT), providing “additional clarity” for businesses mandated to use the system from April 2019.
Under MTD for VAT, businesses with taxable turnover above the VAT registration threshold (currently £85,000) will be required to keep records in digital form, and file VAT returns using “functional compatible software”, if a business’s taxable turnover subsequently falls below the VAT threshold, the MTD requirement will remain,
VAT Notice 700/22 outlines the digital records businesses will be required to keep, and provided information on the ways in which transactions can be recorded digitally. It also supplies guidance on what counts as “functional compatible software”, and highlights instances in which software programs do and do not need to be linked digitally.
As outlined in the Notice, records to be kept digitally include “designatory data”; the VAT account linking primary records and the VAT return; and information regarding supplies made and received. Digital records can be held in multiple compatible formats, and taxpayers will be permitted to use spreadsheets in combination with MTD software. However, manual transfer of data will not be allowed.
Find out what you need to know about MTD from our partners at Xero