VAT Record-Keeping and MTD
Making Tax Digital for Business is a Government initiative also known as MTD. This is a legal requirement implemented and monitored by HMRC – Her Majesty’s Revenue and Customs.
Now that we know the meaning of understanding Making Tax Digital – MTD in Part 1, and Part 2, this is Part 3 of the series which explains VAT record-keeping and MTD.
Businesses that are registered for VAT or with a turnover of more than £85,000 must comply with these rules:
- Your business name, address and VAT registration number
- Any VAT accounting schemes you use
- The VAT on goods and services you supply, for example, everything you sell, lease, transfer or hire out (supplies made)
- The VAT on goods and services you receive, for example, everything you buy, lease, rent or hire (supplies received)
- Any adjustments you make to a return
- The ‘time of supply’ and ‘value of supply’ (value excluding VAT) for everything you buy and sell
- The rate of VAT charged on goods and services you supply
- Reverse charge transactions – where you record the VAT on both the sale price and the purchase price of goods and services you buy
- Your total daily gross takings if you use a retail scheme
- Items you can reclaim VAT on if you use the Flat Rate Scheme
- Your total sales, and the VAT on those sales, if you trade in gold and use the Gold Accounting Scheme
- You also need to keep digital copies of documents that cover multiple transactions made on behalf of your business by:
- Volunteers for charity fundraising
- A third-party business
- Employees for expenses in petty cash
- All these records must be kept in “digital format”
- Name, address and VAT number of any self-billing suppliers
- Debit or credit notes
- Import and export records
- Records of items you cannot reclaim VAT on – for example, business entertainment
- Records of any goods you give away or take from stock for your private use
- Records of all the zero-rated, reduced or VAT exempt items you buy or sell
- You must also keep general business records such as bank statements, cash books, cheque stubs, paying-in slips and till rolls.
How to keep digital records
- You need to use a compatible software package or other software (like spreadsheets) that connect to HMRC systems.
- If you use more than one software package to keep records and submit returns, you need to link them.
Some ways you can link your software include:
- Using formulas to link cells in spreadsheets
- Emailing records
- Putting records on a portable device to give to your agent
- Importing and exporting XML and CSV files
- Downloading and uploading files
For more detailed information, please download the full report from this link.
Our contact details are:
Sterling Finance UK Limited
Website : www.sterlingfinance.net
Email : firstname.lastname@example.org
Tel : 0161 339 4989