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Making Tax Digital for VAT – Draft Regulations and Examples

By Kathryn Jones

On 18 December HMRC published, for consultation, further draft legislation - The Value Added Tax (Amendment) Regulations 2018. This draft legislation includes the amendments required to the VAT regulations to implement Making Tax Digital for Business (MTDfB) as it will apply for VAT.

The proposed secondary legislation will make changes to the VAT regime, effective from 1 April 2019. It would require businesses with taxable turnover above the VAT registration threshold to keep and preserve digital records and provide VAT returns using “functional compatible software”. The draft legislation and explanatory note does not provide us with much information over and above the Making Tax Digital for VAT: Legislation Overview which had previously been published in September 2017.

A draft VAT Notice about keeping digital records and providing VAT returns using software was issued at the same time. Whilst not unexpected the draft Notice makes clear that businesses will have to submit VAT returns using “functional compatible software” and that this will not be provided by HMRC. However the Notice includes, for the first time, examples of how HMRC envisages spreadsheets fitting within the software system and how the relevant data must be extracted.

An addendum to the draft VAT Notice has also been issued which sets out a number of “customer journeys” giving examples of how businesses may choose to keep records and which elements will need to be processed digitally. This includes examples of how spreadsheet information will need to be managed.

The latest documents issued by HMRC can be found here.

For an update on the latest Making Tax Digital developments book onto General Tax Update - Quarter 1.

For more in depth coverage see the course Making Tax Digital: Preparing for 2019. 

January 2018 


This article is published with the understanding that SWAT UK Limited is not engaged in rendering legal or professional services. The material contained in this article neither purports, nor is intended to be, advice on any particular matter. This article is an aid and cannot be expected to replace professional judgment. SWAT UK accepts no responsibility or liability to any person in respect of anything done or omitted to be done by any such person in reliance, whether sole or partial, upon the whole or any part of the contents of this article.