From my research I would advise that MTD VAT does not set any new requirements on retail businesses to link their tills digitally to their accounting software, or to increase the frequency with which they input data from tills, though of course this may change in the future. I think confusion has arisen from a misinterpretation of how the VAT Notice refers to the requirement for digital links and Daily Gross Takings (DGT). Below I've taken some bits from HMRC's VAT Notice 700/22 that should help to clear this up:
At the moment, you just need to maintain digital links after you have input your z/till data into your accounting software:
Once data has been entered into software used to keep and maintain digital records, any further transfer, recapture or modification of that data must be done using digital links. Each piece of software must be digitally linked to other pieces of software to create the digital journey.
ie. the requirement to keep digital links between products/software only applies to components of your 'functional compatible software' of which your clients' tills are not (yet) considered a part.
And, anyway, there is a 'soft landing' for the digital links:
HMRC will allow a period of time, the “soft landing period”, for businesses to have in place digital links between all parts of their functional compatible software.
For the first year of mandation businesses will not be required to have digital links between software programs.
This means that if Making Tax Digital rules first apply to you from a:
- VAT period starting on or after 1 April 2019 - you will have until your first VAT return period starting on or after 1 April 2020 to put digital links in place
- VAT period starting on or after 1 October 2019 - you will have until your first VAT return period starting on or after 1 October 2020 to put digital links in place
Regarding how often you should record the data by inputting it into the 'functional compatible software' you're using to keep digital records and submit MTD VAT Returns, I haven't been able to find any specific guidance.
The VAT Notice simply states this:
...if you account for VAT using a retail scheme you must keep a digital record of your Daily Gross Takings (DGT). You are not required to keep a separate record of the supplies that make up your DGT within functional compatible software.
This is because a retail scheme allows you to calculate VAT on daily sales totals instead of per sale. This doesn't mean you have to input these figures into your software daily. (Companies do, however, need to keep a record of DGT in accordance with the scheme conditions).
For more guidance, here is an extract from an article by Jacquie Mount that appeared in our January newsletter. Jacquie represents us to HMRC and attends their Agent WorkingTogether groups. Here she is referring to invoices but the article also talks about tills:
....it is interesting to note that one of the premises of MTD is that HMRC have stated that the transaction should be entered into the system as near to real time as possible. However, they have not given any guidance as to what this actually means in terms of a time frame. At present, they have agreed that if invoices are entered only when time permits, or the bookkeeper attends the premises, this has to be counted as near to the time of the transaction as possible. Under the existing rules, HMRC do not have access to the dates of input (unless they are carrying out an inspection) and cannot therefore check how close to the point of sale the input has been made. However – the rules may well change once MTD is fully operational, so we await any developments on this front.
I hope that helps!
ICB Head of Communications