Making Tax Digital

The Legislation

VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) are now required to follow the Making Tax Digital rules by keeping digital records and using accounting software to submit their VAT returns.

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If you are below the VAT threshold you can voluntarily join the Making Tax Digital service.

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VAT-registered businesses with a taxable turnover below £85,000 will be required to follow Making Tax digital rules for their first return starting on or after April 2022.

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Self Assessments (with income above £10k) are due to join the scheme from April 2023.

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Records you must keep digitally:

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Currently MTD registered businesses need to keep the following records digitally:

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• Your business name, address and VAT registration number

• Any VAT accounting schemes you use

• The VAT on goods and services you supply, for example everything you sell, lease, transfer or hire out (supplies made)

• The VAT on goods and services you receive, for example everything you buy, lease, rent or hire (supplies received)

• Any adjustments you make to a return

• The ‘time of supply’ and ‘value of supply’ (value excluding VAT) for everything you buy and sell

• The rate of VAT charged on goods and services you supply

• Reverse charge transactions - where you record the VAT on both the sale price and the purchase price of goods and services you buy

• Your total daily gross takings if you use a retail scheme

• Items you can reclaim VAT on if you use the Flat Rate Scheme

• Your total sales, and the VAT on those sales, if you trade in gold and use the Gold Accounting Scheme

​You also need to keep digital copies of documents that cover multiple transactions made on behalf of your business by:

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• Volunteers for charity fundraising

• A third party business

• Expenses for employees in petty cash