What is a digital link and how not to break it!
So, we’ve heard lots about Making Tax Digital for VAT, and we know that if our business’s taxable turnover is over £85,000, we have to keep our business records in digital form and file our VAT returns using functional compatible software.
If we’ve lost you already. Don’t panic. The idea is that your up to date digital records are collated by software which prepares your return. Once you declare that the return is correct, it will submit the return to HMRC, and you’ll receive confirmation that HMRC has it.
You might prepare your own VAT returns, or as your accountants we might do it for you. In that case we either have full access to your digital records or you send them to us in a digital format.
What is functional compatible software? Software that you use to digitally record and keep your business records and that can talk to HMRC’s software through their Application Programming Interface.
You don’t have to use the same software to do both things. So, you can keep your records on an excel spreadsheet – that’s a digital record. But then to send that information to HMRC, using different software, you cannot transfer it manually, and you can’t cut/copy & paste it. That breaks the digital link. You have to transfer it digitally. Digital transfers would include importing, exporting, downloading and uploading data files.
If you are still unclear about what you need to do to comply with MTD for VAT, talk to us. We can help.
Call Stuart Hulland 01332 365855 or email stuarth@batesweston.co.uk