UK VAT registered businesses with a taxable turnover above the VAT threshold are obliged to follow the MTD (Making Tax Digital) rules – keep digital records and use compatible software to submit their VAT returns.

Businesses below the VAT threshold can opt-in to use this service, however, this will change from April 2022 and all VAT returns will have to be submitted through compatible software.

All VAT-registered businesses will be required to operate MTD under the requirements applying from 1 April 2019 for VAT periods starting on or after 1 April 2022, (including self-employed and landlords).

The digital records stored will have to include:

  • your business name, address and VAT registration number
  • any VAT accounting schemes you use
  • the VAT on goods and services you supply, for example, everything you sell, lease, transfer or hire out (supplies made)
  • the VAT on goods and services you receive, for example, everything you buy, lease, rent or hire (supplies received)
  • any adjustments you make to a return
  • the ‘time of supply’ and ‘value of supply’ (value excluding VAT) for everything you buy and sell
  • the rate of VAT charged on goods and services you supply
  • reverse charge transactions – where you record the VAT on both the sale price and the purchase price of goods and services you buy
  • your total daily gross takings if you use a retail scheme
  • items you can reclaim VAT on if you use the Flat Rate Scheme
  • your total sales, and the VAT on those sales, if you trade in gold and use the Gold Accounting Scheme

More details can be found on the HMRC webpage.