All remaining VAT registered businesses must sign up for MTD, keep records digitally (for VAT purposes) and use compatible software for VAT return submission for their first return after 1st April, 2022.
Businesses have been urged to sign up as soon as possible to ensure there are no delays to their returns.
Records must be kept digitally and should include:
- business name and address
- VAT registration number
- Any VAT accounting schemes used
- copies of all invoices you issue
- all invoices you receive (originals or electronic copies)
- self-billing agreements - this is where the customer prepares the invoice
- 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
- 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
- VAT account*
The transactions should include:
- the VAT on goods and services supplied, for example everything sold, leased or hired out (referred to as supplies made)
- the VAT on goods and services you receive, for example everything bought, leased, rented or hired (referred to as supplies received)
- any adjustments made to a return
- the time of supply (click here for more on 'time of supply') and ‘value of supply’ (value excluding VAT) for everything bought and sold
- the rate of VAT charged on goods and services supplied by you
- reverse charge transactions - where you record the VAT on both the sale price and the purchase price of goods and services you buy
Depending on your VAT scheme(s) there is extra information that should be kept:
- your total daily gross takings if you use a retail scheme
Flat Rate Scheme
- items you can reclaim VAT on if you use the Flat Rate Scheme
Gold Accounting 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
You must add all your transactions to your digital records, but you do not need to scan paper records like invoices or receipts.
The rules must be followed unless you apply for an exemption (click here for more information)
Keeping Digital Records
You need to use a compatible software package or other software (like spreadsheets) that connect to HMRC systems. Click here to check if your software is compatible.
If you use more than one software package to keep records and submit returns, you need to link them.
Submitting VAT Returns
Is easy with compatible software. Once you have registered for MTD for VAT and have linked the software, you will use the software to do your submission, a simple press of the button (once you have checked your VAT account to ensure there are no mistakes.)
Benefits For Your Business
- Fewer reporting errors
- Less time spent on paperwork
- Reliable record keeping
- Faster returns filing
- Better collaboration with your bookkeeper
- Real-time overview of business performance and cash flow
If you are unsure:
- of your responsibilities
- whether your software or system is compatible
- if you need to register
- whether you are compliant
Contact us today for support. We offer a FREE, one hour consultation and an ad hoc consultation service to check your system to ensure you are compliant.
*You must keep a separate record of the VAT you charge and the VAT you pay on your purchases. This record is called a ‘VAT account’. You use the figures in your VAT account to complete your VAT Return.
Our video also explains the rules.