Making Tax Digital (MTD) is the government’s programme to improve record keeping by making all records digital - ie on computer (though the individual invoices and receipts themselves can still be paper). After a couple of false starts, which caused a lot of confusion, the first Tax to which MTD is to be applied is VAT. We are advised that other taxes are to follow in the coming years.

Under Making Tax Digital you can no longer type your VAT Return figures into the HMRC portal. From now on, your VAT return must be submitted to HMRC digitally - ie by computer. That means, if you keep your accounts on spreadsheet, you will need to submit your VAT Return via Bridging Software.

Sounds complex, but it isn’t. Just plug The Tax Kit Bridging Tool into your accounts spreadsheet, link the relevant cells and submit your VAT return in compliance with MTD. It’s as simple as that. All that is required is a little work to register with HMRC for MTD, register with our application and authorise it with HMRC - and you’re good to go.

Complying with Making Tax Digital (MTD) is as simple as that.

Calculation and adjustments

But what if you have to make calculations or adjustments?
For example:

  • If you need to make an adjustment to your VAT Return
  • If you need to make an entry into Box 2 of the VAT Return for the calculation of UK VAT on EC Purchases via Northern Ireland
  • If you need to reclaim VAT on imports accounted for through Postponed VAT Accounting
  • If you’re a Partially Exempt trader
  • If you’re registered on the Flat Rate scheme
  • etc

If you have to calculate a value for entry into your VAT Return, you must do that calculation in your spreadsheet and link the resulting figure into the relevant box in the VAT Return Bridging Tool that you have integrated into your accounts spreadsheet. Under MTD you cannot type any numbers into the VAT Return or Bridging Tool, but you can type into your underlying spreadsheet that feeds through to the VAT Return.

For Example: Flat Rate Scheme
If you’re registered on the Flat Rate Scheme, your calculation and any adjustments required must be made on your spreadsheet and then linked to the relevant boxes in the VAT Return Bridging Tool.

How do I register for Making Tax Digital for VAT?

This is no longer required. From November 2022 your VAT Registration will include registration for MTD for VAT.
You can read further deails on our blog post.

We’ve provided some simple guidance and useful links as an introduction to help you. However, this guidance and links are not comprehensive and the VAT regulations are complex. For a full understanding of the rules, please refer to HMRC guidance on their website or discuss with your accountant how the rules apply to your specific circumstances. Please bear in mind that responsibility for the accuracy of your tax affairs remains with you, the taxable person.

Last updated on: 12-Mar-2020