MTD Key Points

Here is a summary of the key points to remember for Making Tax Digital ( MTD ) for VAT purposes:

  1. MTD takes effect for VAT return periods beginning on or after 1st April 2019.
  2. A business that is voluntarily registered does not need to join MTD this year.
  3. Once a business has joined MTD it cannot subsequently leave, even if the turnover falls below the £85,000 threshold.
  4. A business can adopt either a full accounts software package, or use spread sheets with bridging software.
  5. Each invoice must be digitally recorded ( but this does not mean that invoices have to be raised electronically…….they could be handwritten ).
  6. Purchase invoices should be recorded showing the total value plus the input tax claimed.
  7. There is no need to digitally record transactions that are excluded from VAT returns such as wages and drawings.
  8. Sales invoices should record the net figures, and the rate of VAT.
  9. For both sales and purchases, the processing date will be the invoice date unless the business uses the cash accounting scheme, when the payment date is adopted.
  10. Each individual invoice must be recorded in digital format. It is not acceptable to batch invoices together and make one entry based on a payment or statement total.
  11. A transaction does not have to be recorded digitally if this would be ” impossible, impractical, or unduly onerous “. HMRC have confirmed that this would apply to employee expenses for example.
  12. Businesses involved with MTD must submit their returns through HMRC’s Application Programme Interface ( API ).

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