HM Revenue & Customs (HMRC) has updated its VAT notice regarding Making Tax Digital (MTD) for VAT, to relax several of the digital recordkeeping requirements.
One of the changes, secured with the help of the Chartered Institute of Taxation (CIoT), relates to purchase invoices from suppliers.
Prior to the most recent amendment, to VAT Notice 700/22, businesses that receive large quantities of purchase invoices, from the same company, were previously required to file multiple, yet almost identical, records.
This is despite the fact that it might make only a single payment to a supplier based on a statement covering, for example, 40 invoices; an onerous activity to say the least.
However, a relaxation to the rules has been agreed, which will enable businesses to capture their digital records information from supplier statements, rather than from each individual invoice, from 5th May.
The rules apply provided “all supplies on the statement are to be included on the same return and the total VAT charged at each rate is shown”. The change will only apply to purchases and not sales.
In addition, HMRC has also agreed to review the requirement for petty cash. Currently, the strict requirement is to record each individual supply, or at least each invoice/receipt, within a company’s digital records.
Instead, the updated VAT notice says that petty cash transactions can now be added up and summary totals entered as an alternative.
The notice states: “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.”
The third and final relaxation of the rules relates to charity fundraising events run by volunteers.
Under the new guidance the total values of supplies made can be entered as a single transaction, and similarly for supplies received.
HMRC has told the CIoT that it will not currently be seeking to apply record-keeping penalties where a business is clearly trying to comply with the requirements of MTD.
This is in line with their previous promise of providing a ‘soft landing’ period in the first year of the new digital tax regime.
You can read more about these changes and how you can secure the right support ahead of your first MTD- compliant submission in our latest blog, here.
How can George Hay help?
We can help you when it comes to choosing and implementing a system matched to your businesses requirements and we can provide professional advice throughout the transition and beyond.
We are able to work with a range of online accounting software packages including Xero, Kashflow and Sage so, when it comes time to take the leap, we have trained advisers on hand to provide as much or as little assistance as you require.
To discuss MTD for VAT and how you can meet your obligations in more detail, with one of our experts in Bedfordshire, Cambridgeshire or Hertfordshire, contact us today.