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Updated HMRC guidance on MTDfV

20 May 2019

Published by: Amit Dev - Tax Technology lead

“I’ve noticed HMRC have updated their MTDfV guidance in Notice 700/22, what has changed?”

With MTDfV now live for just over a month, HMRC has now recently updated its Notice 700/22. I have received a few queries on this so I thought I would cover the key changes here.

Those registered for MTDfV on a voluntary basis can now revert back to the old method of filing

HMRC says that businesses whose turnover is below the MTD threshold may sign up for MTD voluntarily. However, it now adds that, having signed up voluntarily, a business may decide that it no longer wishes to follow the MTD rules. HMRC says that, provided the taxable turnover is below the VAT registration threshold at that point, the business can tell HMRC it wants to leave the MTDfV service and submit returns the way it submitted them before it signed up for MTDfV. This will be from the start of the next VAT period following the date of notification.

As HMRC has verbally confirmed in previous meetings, the existing VAT portal will remain open for those not within the MTDfV regime.

VAT information provided by agents - The guidance now includes a further example

A business uses a letting agent to rent out a number of properties. Each month the letting agent provides a summary of the rents collected and VAT charged. The business can treat all supplies covered in this summary document as if they were covered by a single sales invoice, rather than treating each invoice issued on their behalf separately. They can group transactions together providing they are within the same VAT period and are charged at the same rate of VAT.

This example is unlikely to cover circumstances where responsibility for supplies is assumed by other persons who are not third party agents of the business. For example, it is unlikely to cover supplies made by an employee on behalf of your business.

New rule for the use of consolidated supplier statements instead of individual invoices

Some businesses record the value of each supply from a supplier statement instead of individual invoices. The law now allows/accepts that 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. Where businesses choose to do this, they must also cross reference all supplies on the supplier statement to invoices received, but this can be done outside of their digital records.

New easement for recording petty cash transactions

Petty cash is traditionally a small amount of cash on hand that covers day to day expenses of a business, such as buying a pint of milk. Requiring businesses to record each of these transactions in digital records could be an unreasonable administrative burden for businesses. Therefore, HMRC has included as a force of law that a number of petty cash transactions can be recorded as a single purchase in the digital records of the business. However, this is subject to a VAT-inclusive limits of less than £50 per individual purchase and a total of £500 per petty cash transaction entry.

New easement for charity fundraising events

A charity fundraising event can include a number of supplies that would need to be recorded on a VAT return. Charities may find it difficult to meet the strict digital record keeping requirements for events run by volunteers. Therefore, HMRC has included as a force of law that charities can record digitally all supplies made relating to the event as if it were a single invoice, and all supplies received can be treated similarly.

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