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MTD for retail businesses

How do retail businesses have to record sales to be MTD compliant

Following yesterday's HMRC webinar, how do retail businesses have to record sales to be MTD compliant. If they usually just give their bookkeeper or accountant weekly or monthly figures to enter into their software or spreadsheet can this practice continue? It obviously makes no sense to enter each transaction individually or even daily totals but as this is manual input to the software is that compliant?

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05th Dec 2018 12:42

You can use a retail scheme.
On one interpretation of the Daily Gross Takings rules interacting with the MTD rules you can ONLY do this quarterly!
I'm ignoring that and doing it in weekly spreadsheets which I then digitally link into the accounting software.

Whatever happens you can't manually input from the spreadsheet to the accounting system as you've suggested is being done now.

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05th Dec 2018 12:50

There are, on average, 91 transactions per quarter if you're doing daily sales. 13, if you're doing weekly.

The difference in typing in 91 over 13 is a grand total of about two minutes, once every three months. I don't see why "it makes no sense to enter ... daily totals", other than, of course, how pointless MTD as a whole is.

My point, I suppose, is that you're focusing on a total non-issue there, when there are plenty of good actual issues around.

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05th Dec 2018 12:54

Have I missed something as I was under the impression HMRC just wanted the VAT Return submitted electronically? They wont have any idea how those figures have been compiled?

At the end of the day if a till system or website etc cant link directly to the accounts software at a reasonable cost then thats not the tax payers fault and I'll be continuing to enter montly sales figures for those clients. I mean what happens with clients who use an older till with a paper till roll? There are litterally thousands of other examples where there is no "digital link" available.

HMRC are absolute morons with no clue of the real world.

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to MissAccounting
05th Dec 2018 12:56

MissAccounting wrote:

Have I missed something .....

Yes, read the regulations (not HMRC 'guidance'), it's not just the uploading of the VAT return figures that needs to be digital, it's each part of the chain of the records.
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By DJKL
to MissAccounting
05th Dec 2018 13:08

http://www.legislation.gov.uk/uksi/2018/261/regulation/7/made

Amendment of the Value Added Tax Regulations 1995
7. After regulation 32 insert—

“32A Recording and keeping of information in electronic form
(1) Subject to regulation 32B a taxable person shall keep and maintain the information specified in paragraphs (2) and (3) in an electronic form (“the electronic account”).

(2) The information specified for the purposes of paragraph (1) is—

(a)the name of the taxable person;
(b)the address of the taxable person’s principal place of business;
(c)the taxable person’s VAT registration number; and
(d)any VAT accounting schemes used by the taxable person.
(3) Subject to paragraph (4) the information specified for the purposes of paragraph (1) for each accounting period is—

(a)subject to sub-paragraph (c), for each supply made within the period—
(i)the time of supply,
(ii)the value of the supply, and
(iii)the rate of VAT charged;
(b)subject to sub-paragraph (c), for each supply received within the period—
(i)the time of supply,
(ii)the value of the supply, and
(iii)the total amount of input tax for which credit is allowable under section 26 of the Act(1);
(c)where more than one supply is recorded on a tax invoice and those supplies are either—
(i)supplies made which are required to be accounted for in respect of the same prescribed accounting period and are subject to the same rate of VAT, or
(ii)supplies received for which credit is allowable in the same prescribed accounting period,they may be treated as a single supply for the purposes of either sub-paragraph (a) or (b), whichever is relevant;
(d)the information specified in each sub-paragraph of paragraphs (3) and (4) of regulation 32;
(e)where adjustment or correction is made to the VAT account which is required or allowed by any provision of the Act, or any regulations made under the Act, the total amount adjusted or corrected for the period pursuant to that provision or those regulations;
(f)the proportions of the total of the VAT exclusive value of all outputs for the period which are attributable in each case to standard rated, reduced rated, zero-rated, exempt or outside the scope outputs.
(4) The information specified in paragraph (3) may be varied by direction of the Commissioners to make provision about—

(a)supplies of investment gold which are subject to the provisions of regulation 31A;
(b)the operation of the flat-rate scheme under Part 7A of these Regulations (flat-rate scheme for small businesses);
(c)the operation of retail schemes under Part 9 of these Regulations (supplies by retailers);
(d)cases where the Commissioners are satisfied that keeping and maintaining information as specified in this regulation is likely to be impossible, impractical or unduly onerous.
(5) The electronic account must be kept and maintained using functional compatible software.

(6) The functional compatible software must take a form approved by the Commissioners in a specific or general direction.

(7) A direction under paragraph (6) may also specify the circumstances in which functional compatible software may be used or not used.

(8) The information specified in paragraph (3) must be entered in the electronic account for the relevant prescribed accounting period no later than the earlier of the date by which the taxable person is required to make the return or the date the return is made for that prescribed accounting period.

(9) Changes to the information specified in paragraph (2) must be made no later than the end of the prescribed accounting period in which those changes occur.

(10) Where a taxable person discovers an error or omission in the electronic account that person must correct the electronic account as soon as possible but in any event no later than the end of the prescribed accounting period in which the error is discovered.

32B Exemption from the electronic recording requirements
(1) The requirements imposed by regulation 32A do not apply to a person—

(a)who the Commissioners are satisfied is a practising member of a religious society or order whose beliefs are incompatible with the use of electronic communications, or
(b)for whom an insolvency procedure as described in any of paragraphs (a) to (f) of section 81(4B) of the Act is applied, or
(c)for whom the Commissioners are satisfied that it is not reasonably practicable to make a return using a compatible software return system for reasons of disability, age, remoteness of location or any other reason.
(2) This paragraph applies if, for any month (“the current month”), the value of a taxable person’s taxable supplies, in the period of one year ending with the month before the current month, was less than the VAT threshold. The “VAT threshold” has the meaning given in paragraph 6(9) of Schedule 11 to the Act(2).

(3) Where paragraph (2) applies to a taxable person for the current month and has not ceased to apply for any month prior to the current month then the requirements of regulation 32A shall not apply to that person.

(4) In a case where paragraph (2) ceases to apply to a taxable person, the requirements of regulation 32A shall apply from the beginning of that person’s next taxable period falling on or after the day on which that application ceases.

(5) Where a business or a part of a business carried on by a taxable person is transferred to another person as a going concern then, for the purposes of determining whether paragraph (2) applies to the transferee, the transferee shall be treated as having carried on the business or part of the business before as well as after the transfer and the supplies by the transferor shall be treated accordingly.

(6) The exemptions under paragraphs (1)(b) and (3) do not apply if a person has elected not to be exempt in accordance with regulation 32C.

32C Election not to be exempt
(1) An election not to be exempt under regulation 32B must—

(a)be made before the start of the next prescribed accounting period (“the period”) in which the exemption would otherwise apply, and
(b)specify the date that the next period begins.
(2) An election has effect for the next period referred to in paragraph (1)(b) and for subsequent periods in which the exemption would otherwise apply.

(3) An election may be withdrawn and the withdrawal shall have effect for the period which immediately follows the period in which it is notified and for subsequent periods.

(4) An election and withdrawal of an election must be made by notice to the Commissioners.”.

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By Tornado
to DJKL
05th Dec 2018 13:14

I will read it later.

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By DJKL
to Tornado
05th Dec 2018 13:24

Section 3 is the really key point re what needs included within the digital records- and to ruin the ending it was the butler who did it.

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to DJKL
05th Dec 2018 13:27

So I now need to ensure that the corner shop gives me a full tax invoice for my Mars bar ?

I honestly believe that HMRC only considered businesses who issue tax invoices for all their sales and receive tax invoices for all their inputs.

Leading, of course, to a lot of conversations along the lines of

"What about .................?"

"Oh aye - never thought of that."

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By DJKL
to MissAccounting
05th Dec 2018 13:22

Do a daily z and record the daily figure.

I have clients with paper till rolls who do this re their shops and then input the takings and credit card and banking figures onto my designed excel sheets, one line per day.

The catch for them/ this "system" re MTD is the payment side, they operate a cashbook system re payments to suppliers and generally pay more than one invoice with a payment-that is going to be non compliant (strictly it might always have been but as HMRC visited re vat for one of the business entities using my DIY excel record keeping system, and complimented me re the records I reckoned my excel sheets system for retail clients was not bad.)

The "system" links right though from daily sheets client inputs to Received summary and Paid summary and Vat return summaries and on to an ETB- simple then to tidy re creditors/stock etc to knock out accounts. It even did the retail scheme calcs and return figures using inputs from purchase summary sheet re standard purchases, zero purchases,Eu purchases.

I also amended it for another client with reverse charge services and non EU exports (online retailer)

The thing is a mess but I am wrestling with my professional conscience- I cannot tell clients to ignore the legislation notwithstanding the stupidity of the legislation.

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By jcace
to MissAccounting
06th Dec 2018 00:23

MissAccounting wrote:

At the end of the day if a till system or website etc cant link directly to the accounts software at a reasonable cost then thats not the tax payers fault and I'll be continuing to enter montly sales figures for those clients. I mean what happens with clients who use an older till with a paper till roll? There are litterally thousands of other examples where there is no "digital link" available.


Tills and websites don't need to link to accounts software. Till rolls will often be the primary source for DAILY takings to be entered in your accounting software. MTD isn't seeking to do away with inputting data, just how it's recorded.
And although it's only the VAT Return figures that will be transmitted to HMRC, whenever they carry out a VAT inspection etc, they'll expect the records to be compliant - that's when they'll find out if the records are not being maintained correctly.
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05th Dec 2018 13:46

Given there are no penalties for non-compliance i imagine if HRMC ever do get excited about how you came up with the figures, the worst they can do is give you a lecture.

Same reason they gave up on the business record checks.

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to ireallyshouldknowthisbut
05th Dec 2018 16:30

ireallyshouldknowthisbut wrote:

Given there are no penalties for non-compliance i imagine if HRMC ever do get excited about how you came up with the figures, the worst they can do is give you a lecture.

Same reason they gave up on the business record checks.

Yeah, b*llocks to it! For certain clients Im sticking with what Ive always done as I see no other feasible option, legislation or otherwise.

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By DJKL
to MissAccounting
05th Dec 2018 16:43

And are you going to be formally telling the clients their records are going to be non compliant; in writing to cover your own back but by so doing providing them with a noose for your own hanging? " Ay, there's the rub".

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to DJKL
05th Dec 2018 16:53

The trick is to advise clients formally that their record keeping "may not" meet HMRC's new requirements.

But tell 'em informally HMRC have nothing in the cupboard to wack them with, so long as they pay over the right amount of tax.

So [***] covered, right amount of tax paid, practical solution.

There is a tendency in british culture to massively over worry about things being or not being quite 'by the book' The key thing is the right amount of VAT is paid at the right time.

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to ireallyshouldknowthisbut
05th Dec 2018 17:02

ireallyshouldknowthisbut wrote:

There is a tendency in british culture to massively over worry about things being or not being quite 'by the book' The key thing is the right amount of VAT is paid at the right time.

So nobody need bother with this MTD thing, then ?

Just pay the right amount of VAT, we'll be grand ?

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to DJKL
05th Dec 2018 16:53

Mmmm - but there are situations where there doesn't seem to be a sensible solution.

Yet.

We're a long way from John the Plumber.

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By Tornado
to lionofludesch
05th Dec 2018 17:16

"We're a long way from John the Plumber."

I think I might contact John as he is obviously fully competent with his book-keeping skills and I could probably utilise his services (book-keeping not plumbing).

All I would need to do is find a spare mobile phone for him to use.

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By DJKL
to Tornado
05th Dec 2018 17:22

Catch will be defining whether John is self employed or your employee- maybe if he provides the phone (own equipment) you can argue he is self employed.

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By Tornado
to DJKL
05th Dec 2018 18:29

On refection, I am wondering if this is the same John the Plumber who looked very efficient with all sorts of information in his phone accounting software but still offered to knock the VAT off if I paid cash.

Good job MTD will fix this.

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By BIGWAL
05th Dec 2018 17:35

It's clear from both of today's webinars that DAILY gross sales must be recorded digitally. (Still not seen a real definition of "digitally" that makes sense, but obviously an "electronic" record) As now, it's only the totals that go into the VAT return, but the digital record must be available for examination.

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to BIGWAL
06th Dec 2018 10:43

BIGWAL wrote:

It's clear from both of today's webinars that DAILY gross sales must be recorded digitally.


What I have not seen is an answer to how quickly the daily figures need to be entered into the digital record. Looking more generally at VAT Notices they appear to need to be "up to date", but would putting them in once a quarter on a daily basis be "up to date".
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to johnhemming
06th Dec 2018 10:54

You need to stop relying on the notices, the regulations are clear:-

(8) The information specified in paragraph (3) must be entered in the electronic account for the relevant prescribed accounting period no later than the earlier of the date by which the taxable person is required to make the return or the date the return is made for that prescribed accounting period.

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