Making Tax Digital for VAT
If you run a VAT registered business, with a taxable turnover above the VAT registration threshold (currently £85,000) you are required to send returns using MTD compatible software, and to keep digital VAT business records. The majority of businesses needed to do this for VAT periods that started after 1 April 2019.
Spreadsheets or software
To calculate VAT transactions, you can still use a spreadsheet. However, if you use spreadsheets you will need MTD-compatible software so that you can send HMRC your VAT returns and receive information back from HMRC. The information must not be physically re-typed into another software package.
Records you need to keep digitally for MTD for VAT
MTD does not require you to keep additional records for VAT, but to record them digitally. Your digital records should include the date of supply, the value of the supply and the rate of VAT charged. You should also keep track of the business name, address, VAT registration number and details of the VAT accounting schemes you use.
What if my taxable turnover is below the VAT MTD threshold?
If your business has a taxable turnover below the VAT threshold you can still sign up for MTD voluntarily.
HMRC encourages business to sign up, so they can benefit from MTD. Using compliant digital software helps you stay on top of business record keeping. Moreover, you can have a better understanding of how your business is performing.
