From April 2019 all VAT registered businesses with turnover above the VAT threshold will be required to maintain digital records and will need to send their VAT information to HMRC using third party commercial software. HMRC’s online portal will remain available to all other businesses that complete a VAT return but have turnover below the VAT threshold.
MTD for VAT will apply to VAT registered businesses with turnover above the VAT threshold. This includes unincorporated businesses, companies, LLPs, and charities. Businesses registered for VAT but with turnover below the VAT threshold can opt in and file their VAT information via MTD if they wish.
Digital record keeping
HMRC has confirmed that the requirement to keep digital records does not mean that businesses will have to make and store invoices and receipts digitally. Businesses can continue to keep documents in paper form if they prefer, although transactions will need to be stored digitally.
HMRC has stated that the following records will need to be kept digitally:
• Your business name
• The address of your principle place of business
• Your VAT registration number
• A record of any VAT accounting schemes that you use.
For each supply you make you must record:
• The time of supply
• The value of the supply
• The rate of VAT charged.
If you make multiple supplies at the same time these do not have to be recorded separately. You can record the total value of supplies on each invoice or receipt that have the same time of supply and rate of VAT charged. You must also have a record of outputs value for the period split between standard rate, reduced rate, zero rate, exempt and outside the scope outputs.
For each supply you receive you must record:
• The time of supply
• The value of the supply including any VAT that is not claimable by you
• The amount of input tax that you will claim.
If more than one supply is on an invoice you can record the totals from the invoice.
Commercial software must be able to:
• Keep records in a digital form.
• Preserve digital records in a digital form.
• Create a VAT return from the digital records.
• Provide HMRC with VAT data on a voluntary basis.
• Receive information from HMRC via the API (application programme interfaces) platform. This will allow HMRC to send ‘nudges’ to the business/agent.
It is recommended you make the transition as soon as possible to digital records……. contact us now to discuss your options.
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