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Making Tax Digital - VAT
‘MTD’ has changed the way VAT returns are filed and will change the way we interact with HMRC for Income Tax and Corporation Tax.
For those within MTD for VAT
- HMRC’s online VAT portal closed
- VAT returns must be submitted to HMRC through MTD software
- Businesses must digitally record their VAT transactions
MTD VAT Software
The list of MTD software is found at https://www.gov.uk/guidance/software-for-sending-income-tax-updates#VAT
An MTD ‘End to End’ software product is one that holds all the source digital records and also produces an MTD VAT return. Importantly software that is not on the list may still be used so long as ‘Bridging’ software is introduced to produce the MTD VAT return. All the popular cloud accounting products are MTD ‘End to End’ products.
Thinking Ahead for Income Tax & Corporation Tax
When choosing between ‘End to End’ software and ‘Bridging’ software a business should also take into consideration that MTD for both Income Tax and Corporation Tax is also going to be introduced.
Digital Records & Digital Links
MTD requires that records are kept digitally within the software. Section 3 of VAT Notice 700/22 explains the digital records that must be stored. It is important that each business does an MTD check of the record keeping process and understands how adjustments are made.
Where data is moved from one software to another there must be a digital link. A number of processes are accepted as being a digital link by HMRC however actions such as ‘cut and paste’ does not qualify.
Check Your Record Keeping
Read VAT notice 700/22 and check that your record keeping process complies
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