MTD - What level of transactional data required?

For VAT registered clients

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Hi all,

I asked a question over at Clearbooks forum that I think needs a broader discussion. Based on current legislation, what level of detail is required on a transactional level for VAT registered customers? Clearbooks stance is 'as long as Clearbooks can automatically send the data to HMRC, you're covered'. Which to me, is clear as mud.

For example, one client processes card payments via iZettle. All sales (including cash) are recorded separately on a transactional basis by a different piece of software. I then create a monthly invoice for the total sales in each month in Clearbooks at the applicable VAT rate based on that separate software. Is this MTD compliant or does it need to be at an individual transaction level?

Tax Advisor states:
In general, MTD will require a digital (that is, not manual) link between the source records (maintained in software or on a spreadsheet), and HMRC, where the information being transferred is the data which is mandated to be kept digitally. So for example, if a business has recorded output VAT of £10,000 and input VAT of £6,000 in its digital records, those amounts must flow digitally to HMRC (either directly from the software or spreadsheet, or via some form of bridging software) because those output and input values are required to be kept digitally.

Source records being the transactional data or the monthly invoice I create? The Input VAT element is fine, because this is already in the accounting software on a transactional level. Sales is different.

Annex 1 of the HMRC website states:

Data for supplies made and received:

VAT accounting date for the transactions on the invoice:

for traders on cash accounting scheme (or on the cash turnover method within the VAT flat rate scheme), the date of receipt or payment

for other traders, the time of supply for VAT purposes (or, for input tax only, the date of receipt of the VAT invoice or alternative evidence if later), this will often, but not always be the date of invoice

the invoice total broken down into sub-totals for each rate of VAT chargeable

the VAT charged at each rate on the invoice

Where an invoice covers several supplies, line by line input of each supply will not be mandatory, provided the VAT accounting date is the same for all of them.

 

Data for supplies made and received - for retailers

The changes introduced under MTD will require businesses to keep a minimum data set electronically. Retailers will be permitted to record electronically sales transaction data based on daily gross takings, rather than recording details of each sale where they account for VAT using a retail scheme.

That to me reads I need to move from monthly invoices to daily invoices in the "MTD compactible software" to meet the minimum requirement. Is that correct? How are other accountants planning to manage this burden? 

Replies (2)

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RLI
By lionofludesch
18th Jul 2018 13:44

Sure. I think retail type transactions will be a big problem which I haven't solved myself as yet.

It looks like each line on something like iZettle or Paypal will need to be treated as a separate transaction with its own VAT content. How that works on apportionment or grossing up schemes is anyone's guess.

It seems to me that the genii at HMRC have only considered businesses who issue invoices for all their sales and receive invoices for all their inputs.

No wonder they think MTDfVAT will be a doddle.

When the VAT officers you meet tell you that they think that their employers are off their collective chump, you know there's a rocky road ahead.

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By ireallyshouldknowthisbut
18th Jul 2018 13:46

I dont think anyone cares so long as the VAT is right.

All this "digitial link" stuff is about transferring the quarterly totals from your bookkeeping system to HMRC is the bit you currently type in.

How you get to the totals is up to you, so long as its all 'digital' which in essence is "anything other than paper". O, and you can keep all the back up in paper form.

read the notice that came out on Friday.

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