From April 2019 VAT registered businesses with sales of more than £85,000 must follow the rules for Making Tax Digital for VAT. This is currently also an option for those VAT registered businesses with sales of less than £85,000, who can follow the rules voluntarily.
(from 1st April 2022 all VAT registered businesses must adhere to the rules.)
Digital records are compatible software packages or other software that allows a digital link to HMRC for seamless uninterrupted filing.
HMRC require you to keep the following records digitally:
- Your business name, address and VAT registration number
- Any VAT accounting scheme you use
- The VAT on goods and services you supply – i.e your sales records
- The VAT on goods and services you receive, i.e your purchase records
- Any adjustments you may make to the return
- Displaying and recording the rate of VAT on goods and services you supply
- Any reverse charge transactions, (where you record the VAT on both the sale price and purchase price of goods and services you buy)
- Your daily gross takings if you use a retail scheme
- Items you can reclaim VAT on if you use the Flat Rate Scheme
You also need to keep digital records of documents that cover multiple transactions made on behalf of your business:
- employees dor expenses in petty cash
- a third party business
- volunteers for charity fundraising
Signing up for Making tax digital is relatively simple, however, if you pay your VAT currently via Direct Debit, do not sign up too close to the date your return is due, or you may pay twice.
To avoid this, do not sign up less than:
- 7 days before your return is due
- 5 days after your return is due
If you do not currently pay via Direct Debit, sign up at least 3 days before your return is due.
The link to sign up for Making Tax Digital for VAT is below:
Click here
Once you have signed up, you should receive an email from “no-reply@tax.service.gov.uk” within 3 days of signing up. It might (probably) go to your Spam folder.
Do not submit a VAT return until you get the confirmation email.