From April 2019, VAT-registered businesses with a turnover above the VAT threshold have had to keep VAT records digitally and send returns to HM Customs using Making Tax Digital (MTD) compatible software.
Currently, you can choose to sign up to Making Tax Digital for VAT if your business earns less than £85,000 but from April 2022, these requirements will apply to all VAT-registered businesses, including those with a turnover below the VAT threshold.
How to keep Making Tax Digital VAT compliant records
You need to use a compatible software package or other software (like spreadsheets) that connect to HMRC systems. If you use more than one software package to keep records and submit returns, you need to link them.
Some ways you can link your software include:
- Using formulas to link cells in spreadsheets
- Emailing records
- Putting records on a portable device to give to your agent, e.g. your book keeper or accountant
- Importing and exporting XML and CSV files
- Downloading and uploading files
It’s worth noting that if you use downloads from marketplaces or payment solutions that you shouldn’t cut and paste from these but should link the spreadsheets or import into your accounting software.
You need to prepare now as you must have links between the software you use by your first VAT period after the 1st of April 2021.
You can sign up for Making Tax Digital here