UK VAT registered businesses over the VAT registration threshold under the Making Tax Digital (MTD) rules must keep and maintain relevant VAT records digitally within ‘functional compatible software’. This digital recordkeeping requirement was mandated on 1 April 2021, following the ending of 'soft-landing' first year phase of MTD. The requirements apply to the first complete VAT return from or after this date. This includes sales and purchase invoices with VAT. Accounting records not specific to VAT return requirements are not included in this.
The following data must be stored digitally to avoid penalties:
- Designatory data: business trading name; address; VAT registration number; any accounting schemes used
- Supplies made: tax point / time of supply; value of supply excluding VAT; rate of VAT charged
- Supplies by third parties: where an agent makes a supply for another business
- Supplies received: time of supply / tax point; value of the supply; amount of input VAT being recovered
- Reverse charge transactions
- Summary VAT return data:
- Total output (sales) VAT owed
- Total VAT owed on acquisitions from other EU member states
- Total VAT to pay for reverse charge supplier transactions
- Total input (purchase) VAT due
- Total VAT allowable on acquisitions from other EU member states
- VAT due or to be refunded due to corrections and errors
- Any other adjustments
Adjustments may be recorded at the summary total level digitally. Individual adjustments need not be stored digitally.
