Introduction to MTD for VAT
Making Tax Digital (MTD) is an HMRC initiative focused on requiring taxpayers to keep digital records and to send updates to HMRC directly from those digital records.
MTD for VAT means that the vast majority of 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 software to submit their VAT returns. Businesses with a taxable turnover below the VAT threshold can also sign up for MTD for VAT voluntarily.
MTD does not require you to keep additional records for VAT, but to record them digitally.
Your digital records should include, for each supply:
the date you supplied the product/service
the value of the supply (net excluding VAT)
the rate of VAT charged.
They should also include information about your business, including business name and principle business address, as well as your VAT registration number and details of any VAT accounting schemes you use.
One allowable form of digital storage is a spreadsheet, which can be used to calculate or summarise VAT transactions to arrive at the return information you need to send HMRC.
Software (such as ABC VAT Bridge) can then be used to pull values from that spreadsheet and submit to HMRC - this is referred to as ‘bridging software’.
To start submitting via MTD for VAT using ABC VAT Bridge:
If you haven’t already, sign up for MTD VAT via the HMRC website - which will involve signing in with your Government Gateway user ID and password
Download ABC VAT Bridge and install it on a PC using Windows or a Mac
When you use the software you will be prompted to authorize ABC VAT Bridge to allow it to connect to MTD for VAT