VAT Notice 700/22
Here is the latest information you need to know about Making Tax Digital (MTD) for VAT.
As the first VAT returns (outside of the pilot scheme) are submitted under the new Making Tax Digital (MTD) rules, HMRC have amended VAT notice 700/22. This amendment provides further guidance on the detail of the scheme and how records should be kept.
VAT Notice 700/22 Making Tax Digital for VAT, sets out who needs to follow the MTD rules, what records need to be kept, and what agents need to do.
This guidance has been revised on the use of supplier statements, recording petty cash transactions and charity fundraising events. The update relaxes the rules on the digital record keeping requirements on these three things.
Strictly, under the MTD rules, individual purchase invoices should be entered separately in the accounting records of the business.
The new ‘relaxed’ guidance allows a supplier statement for a period to be recorded in total (rather than individual invoices). This is provided that all supplies on the statement are to be included on the same return and the total VAT charged at each rate is shown.
A business can now record petty cash transactions as a total value and total input tax, where individual purchases (inclusive of VAT) is below £50 and the total petty cash transactions recorded this way are not more than £500 per entry.
This eliminates the need for very small value transactions to be individually recorded in the digital records.
Charity Fundraising Events
A charity fundraising event can include a number of supplies that would need to be recorded on a VAT return. Charities may find it difficult to meet the strict digital record keeping requirements for events run by volunteers.
Where supplies are made or received during a charity fundraising event run by volunteers you may treat all supplies made as covered by one invoice for the event, and all supplies received as covered by one invoice for the event, for the purposes of the digital record keeping requirements.
This relaxation only varies the requirements on maintaining records using functional compatible software. It does not change any other record keeping requirements set out in VAT legislation.
Need help with Making Tax Digital?
If you need any help preparing for Making Tax Digital or any other help with taxation, accounting or business development advice contact your local MFW office who will be pleased to assist you.