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VAT Notice 700/22: Making Tax Digital for VAT – updated

VAT Notice 700/22: Making Tax Digital for VAT – updated

The VAT notice for MTD has been updated and includes some new information and rules.

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Making Tax Digital (MTD) is mandatory for non-deferred businesses above the VAT threshold for VAT return periods commencing on or after 1 April 2019 and VAT Notice 700/22 contains most of the practical guidance businesses need to comply with the new rules. This notice has been updated and includes new information/rules on the use of supplier statements, petty cash transactions and charity fundraising events. The guidance on the turnover test, following the rules when exempt from MTD, digital links, and supplies made and received by third party agents has also been updated.

There is new content in the Notice covering the following areas:

  • Use of supplier statements – these can be used instead of individual invoices as long as all supplies on the statement relate to the same VAT period, and the total VAT charged at each rate is shown;
  • Petty cash transactions – individual purchases with a VAT-inclusive value below £50 can be batched into a single entry in the digital records. The entry may not however exceed a VAT-inclusive value of £500; and
  • Charity fundraising events – all sales made can be treated as covered by one invoice for the event, and the same for event purchases. 

In relation to the sections that have been updated, of most note in section 4.2.1 Digital links, the following paragraph has been added:

“This could be a transfer or exchange of data within a business (for example, between 2 systems) or a transfer of data to a tax agent in order that they can prepare a VAT Return or make a calculation (for example, a Partial Exemption calculation).”

These new provisions are practical and designed to reduce the work involved in complying with MTD, making compliance easier and more straightforward, and as such will be welcomed by businesses. If you have any questions on these changes or MTD more generally, please speak to your usual contact.

For further information please contact:

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