MTD, Record Keeping & Electronic Invoicing

• Records you must keep include:

  • business name, address and VAT registration number
  • any VAT accounting schemes used
  • copies of all invoices you issue
  • all invoices and receipts you receive (originals or electronic copies)
  • debit or credit notes
  • import and export records
  • a VAT account
  • bank statements, cash books, cheque stubs, paying-in slips and till rolls.
• All records relating to VAT should be kept for at least six years.
• Most VAT registered businesses are required to keep their VAT records digitally, under the Making Tax Digital (MTD) rules. A business can apply for an exemption if they cannot reasonably or practically use computers, software or the internet, but this is rare. 
• Electronic invoicing is the transmission and storage of invoices in an electronic format without duplicate paper documents and can be submitted in various formats.
• There are advantages to using electronic invoicing over traditional paper invoices:

  • speed of delivery 
  • security of electronic environment
  • easier access for auditing 
  • decreased reliance on storage and handling costs
  • rapid access and retrieval
  • improved cash flow.
• Electronic invoices must contain the same information as paper invoices. Electronic invoices can come in various formats including XML and PDF.
• One advantage of electronic invoicing is the ability to send batches of invoices to the same customer, details that are common to the individual invoices need only be recorded once per computer file rather than once per invoice.
• HMRC doesn't need to be informed on the switch to electronic invoices or the system used for issuing, receiving and storing electronic invoices must comply with HMRC.
• Making Tax Digital (MTD) is the government’s first major step in digitalising tax. The aim is two-fold:

  • bulletto make tax administration more effective
  • bulletto help businesses manage their day to day finances better.
• VAT registered businesses are required to keep their VAT records digitally. They must use MTD compatible software (software that meets the demands of the new MTD rules) to submit their VAT returns.