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UK: VAT and Making Tax Digital

What you'll do: set up a UK company for VAT, pick your VAT scheme, prepare the 9 box VAT return, and submit it to HMRC through UK Making Tax Digital (MTD).

The return is a preparation aid. Check it before you submit. The MTD connection has been tested only against our own test server, which imitates HMRC's API, so far: it needs a tester with a registered HMRC developer application.

Set up

  1. Pick United Kingdom when the company first opens. The books are in pounds, with the financial year starting in April (the VAT periods come from HMRC or your stagger).
  2. Alt+K, Company details: the company's VAT registration number (checked with HMRC's check digits; GB and Northern Ireland XI numbers work) and its nation.
  3. Tax rates (C, Tax Rates): the standard (20%), reduced (5%) and zero (0%) classes you use, given to each stock item or sales ledger.
  4. Create Output VAT and Input VAT ledgers under Duties & Taxes, with Type of tax VAT.
  5. On party ledgers, add customers' and suppliers' VAT numbers. A party in another Country counts as abroad.

Reverse charge (imported services, the domestic reverse charge and construction), import VAT and postponed import VAT are handled through tax classes. A sale under reverse charge prints "Reverse charge: Customer to pay the VAT to HMRC." Detail: UK VAT.

Choose your VAT scheme

  1. Alt+G, VAT Return (UK, 9 boxes).
  2. Press Ctrl+Alt+F (VAT Schemes).
  3. Choose standard accounting, cash accounting or the flat rate scheme (with your sector, percentage and the 1% discount in your first year), and set limited cost business, turnover basis and annual accounting as they apply.
  4. Accept.

The scheme settings stay in this company file on this computer; they don't sync.

Prepare the return

  1. Alt+G, VAT Return (UK, 9 boxes).
  2. F2 sets the period.
  3. Check the nine boxes. Ctrl+P prints, Ctrl+E saves a CSV, and Ctrl+Alt+J saves the MTD JSON body.

Submit through MTD

Connect once:

  1. Alt+G, Making Tax Digital settings (UK): enter your own HMRC developer application's client ID and secret, choose sandbox or production, and the redirect port. These are kept on this computer.
  2. Alt+G, Making Tax Digital: VAT periods (UK), then Ctrl+Alt+C (Connect). Sign in to HMRC in your browser and grant access.

Each period:

  1. In Making Tax Digital: VAT periods (UK), the open periods (obligations) come from HMRC.
  2. Press Enter on the open period to see its return.
  3. Tick the declaration, and press Ctrl+Alt+T to submit.
  4. Keep the receipt HMRC sends back.

Ctrl+Alt+L shows your VAT liabilities. In the sandbox, Ctrl+Alt+H tests the fraud prevention headers.

The Desk shows VAT, Corporation Tax, accounts and confirmation statement due dates once you set your stagger in the compliance profile.

Not there yet

E-invoices (the UK has no mandate yet; invoices are PDF), payroll and RTI, and filing Corporation Tax or accounts.