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Get ready for August MTD submissions

Quarterly VAT filers need to be signed up and ready by their 7 August submission date, but should check important updates on digital record-keeping, says LSCA Taxation Committee member Sharon Cooke.

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July 2019

Businesses mandated into Making Tax Digital (MTD) for VAT are currently going through the required sign-up process to ensure that they are ready to file their first VAT return commencing on or after 1 April 2019 (1 October 2019 in some limited cases) using functional compatible software.

This will first affect monthly filers, due to submit their return to 30 April 2019 by 7 June 2019 (for those who pay electronically).

Quarterly filers with a 1 April – 30 June 2019 VAT period will need to be signed up and ready by their due submission date of 7 August 2019 (for those who pay electronically).

Careful consideration needs to be given to when a business should sign up for MTD and there is more information about deadlines and restrictions here.

The main VAT Notice surrounding MTD is Notice 700/22. This Notice received an important update on 3 May 2019 and now includes some additional digital record-keeping relaxations for affected businesses. The update also builds on guidance around:

  • The turnover test;
  • Following the rules as an exempt business (ie, voluntary sign up);
  • Digital links;
  • Supplies made by third party agents; and
  • Charity fundraising events

The new digital record-keeping relaxations are likely to be of interest to many businesses as they affect routine transactions around paying suppliers based on statement information and, also, use of petty cash in the business. The relevant extracts from Notice 700/22 are:

Use of supplier statements (4.3.3.1)

The following rule has the force of law: Where a supplier issues a statement for a period you may record the totals from the supplier statement (rather than the individual invoices) provided all supplies on the statement are to be included on the same return and the total VAT charged at each rate is shown.

Petty cash transactions (4.3.3.2)

The following rule has the force of law: Where a business uses petty cash to pay for small value items, these do not need to be individually recorded in the digital records. The business can record the total value and the total input tax allowable. This applies to individual purchases with a VAT-inclusive value below £50 and the total value of petty cash transactions recorded in this way cannot exceed a VAT-inclusive value of £500 per entry.

Sharon Cooke is London director at Mercia and a member of the LSCA Taxation Committee

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