Making Tax Digital for VAT – What records must be kept digitally?

Under Making Tax Digital (MTD) for VAT, which is coming into effect from 1^st April 2019, these records must now be kept digitally within functional compatible software. See the following outline as a guide to what HM Revenue & Customs (HMRC) are looking for:

 

Essential Details

• Your Business Name
• The address of your principal 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 date

– The value

– The rate of VAT charged. Where no VAT is charged, you must record whether the supply is zero rated, exempt or outside the scope of VAT.

 

If you account for VAT using a retail scheme you are not required to keep a separate record of the supplies that make up your Gross Daily Takings (GDT) within functional compatible software.

 

Values – OUTPUT (SALES)

To show the link between the output tax in your records and the output tax on the return, you must

have a record of:

• The output tax you owe on sales
• The output tax you owe on acquisitions from other EU member states
• The tax you are required to pay on behalf of your supplier under a reverse charge procedure
• The tax that needs to be paid following a correction or error adjustment
• Any other adjustment required by VAT rules

 

For each supply you Receive you must record:

To show the link between the input tax in your records and the input tax on your return you must

have a record of:

– The date

– The value

– The amount of input tax that you will claim

 

Values – INPUT (PURCHASES)

To show the link between the input tax in your records and the input tax on your return you must

have a record of:

• The input tax you are entitled to claim from business purchases
• The input tax allowable on acquisitions from other EU member states
• The tax that you are entitled to reclaim following a correction or error adjustment
• Any other necessary adjustments

 

The complete set of digital records to meet MTD requirements do not all have to be in one piece of software. It there is a digital link between the pieces of software, records can be kept in a range of compatible digital formats.

To ensure your records are prepared according to the upcoming changes speak to one of our VAT experts.