As part of their ‘Making Tax Digital’ transformation plan, HMRC is now requiring all VAT registered companies with a taxable turnover above the current threshold of £85,000 to start keeping their VAT Tax Records online using specialist digital record keeping software. Businesses must also send VAT returns using software that is compliant with ‘Making Tax Digital’.
Companies do not need to start keeping brand new records about VAT or write up any new business records - the old records simply need to be transferred from hard copy to digital. These records, once available digitally, can be stored on multiple platforms, including desktop computers, laptops, tablets and even smartphones. There is no requirement for companies to keep all their VAT records on one piece of software, but they must make sure that the data can flow digitally between the programmes.
These digital VAT records will store all information about VAT from within the company, including details of the supplies you make and receive, as well as the rate of VAT charged on each supply. Businesses are currently required by law to keep and maintain detailed VAT accounts and these must be moved to the online database from April 2019.
Digital VAT records will form the basis of your VAT returns, which you’ll also need to deliver digitally using MTD compatible software (Making Tax Digital). If you don’t currently keep digital records or want to see what products are available, you can find lists of MTD software suppliers here. For more information, you can head to HMRC’s YouTube channel for specially recorded webinars and short tutorials to get you ready for Making Tax Digital.