On 13 July 2018, HMRC published “VAT Notice 700/22: Making Tax Digital for VAT”, which provides guidance on digital record keeping and return requirements for Making Tax Digital for VAT.
The rules will come into effect on the first VAT period after 1 April 2019.
VAT registered businesses whose taxable turnover exceeds the VAT registration threshold of £85,000 will be obliged to:
• maintain and preserve records in a digital form
• file VAT returns using functional compatible software, and
• communicate digitally with HMRC through the Application Programming Interface program.
Records that must be maintained in digital form include the time and value of supplies made and received, including those made and received by third party agents. The software will then be able to prepare the VAT returns before requiring confirmation that they are correct and can be sent to HMRC.
The Notice provides some useful examples illustrating how the rules will apply to businesses.
A copy of the Notice can be viewed here.