Just when you thought it was safe to go back in the water…
In case you missed it, from 1st April 2022, all VAT registered businesses, however small, must be registered for MTD (Making Tax Digital) for VAT. Previously you only needed to register if your turnover exceeded the VAT threshold of £85,000.
What does this mean…
- ABSOLUTELY NO MORE HANDWRITTEN RECORDS OR LEDGERS.
- You must keep your business records in a digital format and submit your VAT returns using MTD compatible software (Quickbooks, Xero, Sage etc).
- There must be an unbroken digital link between the software used to record the transactions to HMRC.
- You can choose to attach a scanned or photographed image of all your sales and purchase documents with its attendant transaction in the software itself. (then you can throw away the pieces of paper).
- OR you can choose just to enter the transactions from your bank statements (in this case you must still keep all your paper records).
- You cannot just enter one income line for several invoices – each one must be separated out into individual sales transactions.
Can’t I just use Excel?
- Although you can continue using Excel spreadsheetsafter the MTD deadline via a bridging software, it is not acceptable to then cut and paste that information or retype it into other software for filing. It must be a seamless DIGITAL LINK in place from the accounting software into the spreadsheet to provide an uninterrupted digital journey from the bridging software to HMRC – so you might just as well use compatible software to start with.
HMRC accepts the following as digital links:
- emailing a spreadsheet containing digital records, so the information can be imported into another software product
- transferring a set of digital records onto a portable device (for example, a pen drive, memory stick or flash drive) and physically giving this to someone else, who then imports the data into their software
- XML, CSV import and export, and download and upload of files
- automated data transfer
- API transfer
None the wiser? See VAT Notice 200/22 for full details (or give us a ring…)