VT Software's HMRC-recognised Making Tax Digital VAT software enables you to easily generate and submit a VAT return to HMRC in a few clicks.
VAT returns can be submitted from the bookkeeping software, VT Transaction+/VT Cashbook, or from a spreadsheet using the VT Report bridging tool.
VAT returns can be submitted for any number of businesses and there are no limits to the number of submissions.
Frequently asked questions - Making Tax Digital for VAT
Set up MTD for VAT - Businesses
The following information provides general guidance and should not be relied upon as definitive tax advice, since individual circumstances may vary. See disclaimer.
For further information on Making Tax Digital for VAT, see HMRC VAT Notice 700-22.
What is Making Tax Digital for VAT?
Do I have to submit my VAT return digitally?
Who is exempt from Making Tax Digital for VAT?
What is the threshold for Making Tax Digital for VAT?
How do I register for Making Tax Digital for VAT?
What VAT records do I need to keep?
Do I need to record each indivudual sale?
Do I need to record each individual purchase?
Do I have to keep paper copies of invoices?
How do I set up Making Tax Digital for VAT?
Can I use an Excel spreadsheet to submit digital VAT returns?
Can I use bridging software for VAT?
Do VT's programs comply with the digital links requirement?
Can I import summary totals of sales from a billing system to VT?
Making Tax Digital for VAT (also referred to as MTD for VAT) is a legal requirement to keep certain VAT records digitally and submit VAT returns to HMRC using Making Tax Digital for VAT compatible software.
Yes. If you are VAT registered, you are legally required to submit VAT returns digitally using MTD for VAT compatible software, and comply with Making Tax Digital for VAT.
You might be entitled to an exemption if it is unreasonable or impractical for you to follow the MTD for VAT rules, or to use computers, software or the internet (including religious orders, whose beliefs are against using electronic communication or computers). This can be applied for at Applying for an exemption from Making Tax Digital for VAT - GOV.UK.
There is no turnover threshold for Making Tax Digital for VAT. Since April 2022, VAT registered businesses and organisations must comply with Making Tax Digital for VAT regardless of their level of turnover.
If you are already VAT registered, you will already have been registered for MTD for VAT. New VAT registrations will automatically be registered for MTD for VAT.
The gov.uk page Keeping VAT records provides details of all VAT records that a business must keep, and those that must be kept digitally.
Do I need to record each individual sale?
You must record digitally, each VATable sale you make. This record must contain the time of supply (date), net amount, and VAT.
Sales of different items on the same invoice, with the same VAT rate, and from the same VAT period, can be recorded as a single transaction.
There is an exemption to the requirement to digitally record individual sales, for retail businesses who account for VAT using a retail scheme. This exemption allows them to keep digital records of daily gross takings (DGT) instead.
You must record digitally, each VATable purchase you make. This record must contain the time of supply (date), net amount, and VAT.
Purchases of different items on the same invoice can be recorded as a single transaction, and they do not have to be split by different VAT rates.
However, HMRC allow you to record totals from a supplier statement instead of the individual invoices, provided that all supplies on the statement are on the same VAT return and the total VAT charged at each rate is shown.
Do I have to keep paper copies of invoices?
Copies of invoices can be in digital or paper form. For further details see HMRC VAT Notice: 700/21 Record Keeping.
In the application from which you want to submit a VAT return (either VT Transaction+, VT Cash Book, VT Report or VT MTD for Excel), you need to 'grant authority', which allows the program to communicate electronically with HMRC. This needs to be done once every 18 months. You will need your Government Gateway user ID and password for this process.
If you are an agent, you also need to obtain authorisation from your clients to act on their behalf by following HMRC's 'digital handshake' process.
Granting authority can be done is a few simple steps as shown in Setting up MTD for VAT - Businesses, or Setting up MTD for VAT - Agents if you are an agent using an Agent Services Account.
Once you have granted authority, you can submit VAT returns from the software.
Once you have entered transactions in the bookkeeping software (VT Transaction+ or VT Cash Book) and granted authority, you can generate a VAT return and submit it to HMRC in a few easy steps, shown in Submitting a VAT return.
Yes, you can submit a VAT return from a spreadsheet using VT's spreadsheet program VT Report.
Note that when submitting a VAT return from a spreadsheet, the figures in the boxes must be digitally linked back to the individual sales (or daily gross takings if you use a VAT retail scheme) and individual purchases (or totals for each VAT rate from a supplier statement).
If you use other accounting software that is not MTD for VAT compatible, you can use VT Report as a 'bridging tool' to submit a VAT return on a spreadsheet by MTD.
In practice this means importing the required data from your other accounting software to a spreadsheet using VT Report. You would then manually create a VAT return within the same spreadsheet, and link the figures from the VAT boxed to the relevant totals from the imported data using formulas.
In VT Report, data can be imported by selecting Data > Get Data from File.
A digital link is an electronic transfer of data within a software application or between different software applications.
For example, in a VAT record keeping system, output VAT on a VAT return is derived from the following flow of data:
1) Entries of individual sales
2) Total output VAT of individual sales
3) Output VAT on VAT return
The figure in 3) comes from 2). They are digitally linked if the figure in 3) is electronically picked up from 2).
They would be manually linked however, if the figure in 3) is copied/pasted from 2) or manually entered.
Digital links must exist between the data transferred within your VAT record keeping system. Manual links are not allowed (with a few exceptions for certain calculations needed for the VAT return that are made outside of the system).
In practical terms, this means that data transfer must flow electronically from the transaction entries through to the boxes in the VAT return, and onward submission to HMRC. You cannot enter figures directly in the boxes on the VAT return.
Within this journey, data from one part of your VAT record keeping system cannot be copied/pasted to another part, nor can it be manually entered.
Examples of digital links are:
XML, CSV import and export, and download and upload of files /p>
automated data transfer
API (Application Programming Interface) transfer
eemailing a spreadsheet containing digital records, so the information can be imported into another software product
transferring a set of digital records onto a portable device (for example, a pen drive, memory stick or flash drive) and physically giving this to someone else, who then imports the data into their software
Data for certain calculations for your VAT return can be manually entered. HMRC provide further details in HMRC VAT Notice: 700/22.
If you only use VT Transaction+ or VT Cash Book to enter individual transactions and submit your VAT return, digital links are automatically in place and therefore is compliant with the digital links requirement.
If you use another program together with VT Transaction+ or VT Cash Book, which forms your VAT record keeping system (for example a billing system), you need to make sure that digital links are in place between the other program and VT Transaction+ or VT Cash Book. Acceptable digital links include export and import of data.
IIf you use VT Report to submit a VAT return from a spreadsheet, you need to make sure that the figures in your VAT return are digitally linked back to the individual sales transactions (or daily gross takings if you use a VAT retail scheme) and individual purchases transactions (or totals from a supplier statement for each different VAT rate). Acceptable digital links include formulas linking cells in spreadsheets, and export and import of data from another source.
Can I import summary totals of sales from a billing system to VT?
Yes, provided that the billing system contains records of the individual transactions (or daily gross takings for businesses who use a VAT retail scheme), and digital links are in place between the totals of the individual transactions in the billing system and VT. Exporting data from the billing system and importing it to VT is an acceptable digital link.
