Record keeping under MTD for VAT

[kgeorge4]

Hi Guys,


We buy dozens of things on a credit card each month, at the end of the month we pay the credit card bill by direct debit.

In our accounts spreadsheet, we enter the total amount spent on the credit card (Net, Vat & Gross) for that month along with the date we paid the credit card bill.

Is this adequate for our records under MTD record keeping?

Someone has suggested that we would have to enter “each” transaction into the spreadsheet along with the item cost and transaction date. Is this correct?

If the above is correct, would this also mean if we bought goods several times a week from a supplier on account, then paid their bill at the end of the month, we would have to list individual items, their cost (Net, Vat & Gross) and the dates we bought them as separate entries?

Your comments are welcome,
Keith

[robbob]

I think there is very little advise that i can see with regard to batching items together where those items are not paid by a third party or employee (in which case batching would be acceptable based on batch supplied by employee)

In some respects this is probably one of the main bugbears with MTD if hmrc demand that say 25 invoices to same supplier paid same date with same vat rating all be listed separately - in some respects that's more likely to end up with the wrong total than the batch summary which is known to be the correct total.

In some respects credit card is worse in that they are separate supplies on separate dates and if its cash accounting then potentially separate vat periods.

I thought i had seen somewhere something about keeping individual transactions not being reasonably practicable - i am not sure where that advise has gone or is located though.

https://www.gov.uk/guidance/keep-digital-records-for-making-tax-digital-for-vat

HMRC help is that woeful that they don't even seem to know that people pay money out for purchases bought rather than being given the goods and then also receiving payment from their supplier!!

link to comedy advise here
https://www.gov.uk/guidance/keep-digital-records-for-making-tax-digital-for-vat

Supplies your business receives
For each supply your business receives, you must keep a digital record of the:
time of supply – this is usually when you receive the invoice, if you’re on a cash accounting scheme this is the date you received payment
value of supply - including any VAT that your business cannot claim amount of input tax you’ll claim
If there is more than one supply on an invoice, you can record the total from the invoice in one record.

I think it is sensible to list individually anything bought in the business name if you want to be sure to be on the right side of things - i would expect further practical advise to be forthcoming over the next 12 months that will clarify the situation.

If the above is correct, would this also mean if we bought goods several times a week from a supplier on account, then paid their bill at the end of the month, we would have to list individual items, their cost (Net, Vat & Gross) and the dates we bought them as separate entries?

lol that came out as twisted evil roll when i copied the smileys - probably rather apt for hmrc at present they are on a twisted evil roll at present in this regard - perhaps we need some tiger for light relief tomorrow?

The advise basically says that for each individual supply they want the value for that supply and the vat for that supply - that information will not be available where you very sensibly batch invoices into on total based on payment date. Bizarrely you are fine on cash accounting to batch payments made in same period against the same invoice - as if any accounting package would actually do that when calculating vat on cash accounting - every package i have ever seen where records are based on payment date that doesnt involve the hassle of a daybook batches the stuff the opposite way round to the way that the vat office batch things - gotta love is the twisted evil TIGER ROLLs

anyway its about time we had the new Red rum aint it ?

[kgeorge4]

Thank you for your input robbob.

I wonder if anyone else has any comments!

[robbob]

I had an article through from Croner today and that also confirmed that each invoice should be individually recorded unless it was a batch reimbursement for employee expenses or third party expenses

[Trevor S]

I would consider that individual supplies are covered by MTD, and the supplies are made by individual suppliers to you, not by the credit card company.

However... how are you currently arriving at the VAT figure? Presumably this isn't shown on the credit card bill, so you're either adding it up on a calculator, or entering it on a (separate) spreadsheet.

• If its the former, it explains why HMRC believe that MTD could reduce errors - in that you could miskey figures in the calculator, but your accounting spreadsheet presumably has checks to ensure that VAT is a reasonable percentage of net.

• If its the latter, is there any way you could link/import (not copy/paste) the totals that would satisfy HMRC's requirements for digital links?

[robbob]

Thankfully hmrc have issued new guidance in relation to the batching of invoices under MTD where the invoices are in the same tax period are from the same supplier and are covered by supplier statements - so not a fix for individual transactions on a business credit card but it does solve the more pressing issue with regard to suppliers who issue so many invoices per month that entering the invoices individually would be a ridiculous over complication.

https://www.gov.uk/government/publications/vat-notice-70022-making-tax-digital-for-vat/vat-notice-70022-making-tax-digital-for-vat#use-of-supplier-statements

4.3 .3.1 Use of supplier statements
Therefore, HMRC can accept the recording of totals from a supplier statement where all the supplies on the statement relate to the same VAT period and the total VAT charged at each rate is shown. If you choose to do this, you must also cross reference all supplies on the supplier statement to invoices received, but this can be done outside of your digital records.