HMRC have today issued VAT Notice 700/22: Making Tax Digital which offers explanations to some of the questions surrounding the initiative. Making Tax Digital requires charities and businesses with a taxable turnover above the VAT registration threshold to keep specific digital records and submit VAT returns using “functional compatible software”.
The Notice explains which records must be kept by charities and businesses as well as ways to digitally record transactions when required. It also sheds some light on what constitutes “functional compatible software” and some of the issues which may arise where a combination of programs is used and where these may or may not require to be digitally linked with one another.
This Notice is particularly important because of the amount of organisations that will be affected. We would recommend that it be read thoroughly to ensure compliance when the initiative takes full effect next year.
Alongside the VAT Notice, HMRC released some supporting documents to offer more assistance to both charities and businesses. We recommend that these be read as well to ensure the highest degree of compliance is achieved.
If any doubt arises around the way in which your charity may be affected by Making Tax Digital then please do not hesitate to contact CVC at any time.