VAT registered businesses with a taxable turnover of more than 85,000 must follow the rules for “Making Tax Digital” by keeping some records digitally unless

  • Your business uses the VAT GIANT service, for example, if you’re a government department or an NHS Trust
  • You apply for an exemption You can choose to sign to Making Tax Digital for VAT if your business earns less than £85,000

Records you must keep digitally You need to keep the following records digitally

  • 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 •Any adjustments you make to a return
  • The “time of supply”
  • The rate of VAT charged on goods and services you supply
  • Reserve 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 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 you also need to keep digital copies of documents that cover multiple transactions made on behalf of your business by:
  • Volunteers for charity fundraising
  • A third party business
  • Employees for expenses in petty cash

How to keep digital records

You need to use a compatible software package or otherwise (like spreadsheets) that connect to HMRC systems

if you use more than one software package to keep records and submit returns, you need to link them

Some way you can link your software include :

  • Using formulas to link cells in spreadsheets
  • Emailing records
  • Putting records and a portable device to give your agent
  • Importing and exporting XML and CSV files
  • Downloading and uploading files

Making Tax Digital for Income Tax

Self-employed businesses and landlords with annual business or property income above £10,000 will need to follow the rules for MTD for income tax from their next accounting period starting on or after 6 April 2023

Some businesses and agents are already keeping digital records and providing updates to HMRC as part of a live pilot to test and develop the Making Tax digital service for income tax. If you are a self-employed business or landlord you can voluntarily use software to keep business records digitally and send income tax updates to HMRC instead of filing a self-assessment tax return

Making Tax Digital for Corporation tax

The government has published a consultation on the future design of Making tax digital for corporation tax and welcome views form companies and other organizations within the charge to Corporation Tax, agents, professional bodies, and software developers.

The government will provide businesses with an opportunity to take part in a pilot for Making Tax digital for tax corporation tax and will not mandate its usage before 2026.