HMRC confirms supplier statements are acceptable for MTD

HMRC has stated that it is happy to accept totals from supplier statements for Making Tax Digital for VAT (MTDfV) purposes, according to the Association of Accounting Technicians.

“Despite the pervading gloom that generally appears around the time of any change in the way that we interact with HMRC, it’s great that common sense has won out this time,” said Brian Palmer, tax policy expert at the AAT. “Initially, HMRC expected businesses to digitally record each and every single individual invoice, no matter how inconsequential it might be.

“This, naturally, went down like a lead balloon among accountants and bookkeepers, who historically would only have needed to record a summary (one-line entry) to reflect a single payment based on the amount recorded covering a myriad of different invoices. This was accepted by HMRC and the profession alike, but initially was not accepted by MTDfV.”

He added: “On 5 May 2019, HMRC updated its online guide for MTDfV. A newly introduced paragraph now reads: ‘HMRC accepts there may be additional work for a business in capturing individual supplies digitally and this in itself could lead to data entry errors. 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.’

“As a result, the practice that was commonplace prior to MTDfV can now continue in tomorrow’s digital future. The department has relaxed its former hardline attitude to the posting of purchase and expenses data, through allowing those accounting for VAT under cash accounting rules to digitally record supplier statement totals, instead of entering each and every underlying invoice.”

Palmer added that there are, however, ground rules for recording transactions via supplier statements. These include:

  • All recorded transactions must be from the same VAT period
  • If more than one VAT rate is applicable, summary totals should be prepared for each rate
  • All items on the statement must be supported by the original VAT invoice.
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