Making VAT digital Q

[Teddy Lop]

Sole trader hovering around the VAT threshold in the building game

I've got the vital tax addon for excel, the demo suggests the spreadsheet should list all invoices both in and out?

my invoices no prob I spreadsheet them anyway buy I've got hundreds of receipts, will the they expect to see this itemised/listed? Or will ~£10k purchases suffice?

[Eric Mc]

HMRC only see the totals. However, somewhere in your system you should be entering all those individual receipts so that you can arrive at the totals required.

[Teddy Lop]

Thanks, is a manual system ie a wallet full of receipts for each quarter still "acceptable"?

[Eric Mc]

Not really.

You must summarise the information somewhere though or else how do you arrive at your total expenditure and the Input VAT you want to reclaim. You must add them up somehow.

[tamore]

£30 a month for one of the packages where you just take photo of everything and a couple of lines of data. absolute doddle. xero in my case.

[Mr Whippy]

Eric Mc said:

Not really.

You must summarise the information somewhere though or else how do you arrive at your total expenditure and the Input VAT you want to reclaim. You must add them up somehow.

Surely if you’re ever audited they’ll want to see the raw data?

So what difference does it make if you sum invoice inputs in a spreadsheet, or on a calculator?

[Teddy Lop]

Eric Mc said:

HMRC only see the totals.

Going back to this - so the whole palarva does nothing for HMRC that having their own manual input front end did before?

Except require every small business to buy extra software just to enter a few miserable digits?

Times like this you have to wonder if it's a civic duty to avoid as much tax as possible just to try to restrict how much capacity they have to think of ways they can waste our time and money.

[Eric Mc]

Mr Whippy said:

Surely if you’re ever audited they’ll want to see the raw data?

So what difference does it make if you sum invoice inputs in a spreadsheet, or on a calculator?

I was referring to what HMRC sees when the VAT return is submitted. All they see on the return is the totals. That has always been the case since VAT was first introduced in 1973. Of course the underlying summaries , source invoices etc must exist in order to arrive at those totals and HMRC is entitled to see those documents and summaries/calculations if they really want to.

In the old days, every VAT registered business received a regular visit from the VAT Inspectors every two to three years. This was to ensure they were doing things properly and was referred to as a "Compliance Visit".

This doesn't happen any more.

[Eric Mc]

Teddy Lop said:

Eric Mc said:

HMRC only see the totals.

Going back to this - so the whole palarva does nothing for HMRC that having their own manual input front end did before?

Except require every small business to buy extra software just to enter a few miserable digits?

Times like this you have to wonder if it's a civic duty to avoid as much tax as possible just to try to restrict how much capacity they have to think of ways they can waste our time and money.

Essentially, what you say is correct. At the moment HMRC is not getting anything better from the VAT return compared to what they got with the previous system.
That may change in the future as the original intent of the Making Tax Digital initiative was for businesses and individuals to upload to HMRC ALL the underlying transactions and summaries as well. This was not just for VAT (MTD VAT) but also for personal Income Tax (MTD ITSA) and eventually company Corporation Tax as well (MTD CT).

As we have seen, since the project was announced in the Spring 2015 Budget, the implementation of some aspects of it (MTD ITSA in particular) has been massively delayed (April 2026 is the latest date - it was originally supposed to be implemented in April 2018) and other aspects have been significantly watered down.