Keeping records digitally means that certain records must be recorded and stored in a digital format and all VAT returns must be submitted digitally to HMRC using compatible software.
HMRC will require the following data to be stored digitally, however you will not be required to submit this data to HMRC with your VAT returns:
- Business information – which includes your business name, principal place of business address, VAT registration number and any VAT scheme you may be using.
- Sales and purchases– for each supply you must record
- The date of supply (tax point)
- Net value of the supply
- Rate of VAT charged/ claimed
This only applies to supplies and purchases that are included in your VAT return, supplies/purchases that do not go on your VAT return are not required to be recorded digitally. You also do not need to record every single item, if more than one item is purchased in a transaction, a single entry for the invoice will suffice. For invoices that contain items at different VAT rates you will need to detail the total VAT of the different VAT rates. If you are using software it should be able to deal with this, however if you are using a spreadsheet you may have to add in different columns for each VAT rate.
- Reverse charge transactions – If your software does not record reverse charge transactions you will need to record the reverse charge twice, once as a supply made and a second time as a supply received.
- Supporting information – HMRC will require the following information to support each VAT return:
- The total output tax owing on sales
- The total tax you owe on acquisitions from other EU member states
- The total tax you are required to pay on behalf of your supplier under a reverse charge
- The total input tax you are entitled to claim on business purchases
- The total input tax allowable on acquisitions from other EU member states
- The total tax that needs to be paid or you are entitled to reclaim following a correction or error adjustment, and
- Any other adjustment allowed or required by VAT rules. A total of each type of adjustment must be recorded on a separate line.