United Kingdom to Mandate Electronic VAT Through Making Tax Digital (MTD)

making tax digital

The United Kingdom has developed its own electronic VAT model known as Making Tax Digital (MTD). Following the path of other countries such as Spain, Hungary and Lithuania, the country takes a further step toward digital business and tax transformation.

This model came into effect on April 1, 2019, for businesses with a taxable turnover above the VAT registration threshold of £85,000. Now, HMRC is extending the requirement to businesses with a turnover below the £85,000 VAT threshold for their first VAT return period from April 1, 2022. These businesses should be able to file their VAT records in digital format and send VAT returns to HMRC via API electronically without manual intervention. This report must be reported to HMRC on a quarterly or monthly basis.

The UK's objective is to have greater control over tax evasion, but also to reduce errors that occur in manually processed documents.

What are the MTD model requirements?

  • Automatic generation of VAT books in a structured format. The file should contain the 9 boxes currently reported by other routes to HMRC.
  • Communication with HMRC: The connection with the UK Revenue will be via the WebServices protocol via API.
  • Electronic storage of VAT books.

EDICOM offers a service to transform the necessary data to the format required by HMRC, securely connect and automatically send the VAT report and, finally, store the documents electronically with all the necessary data. The EDICOM solution will receive and process the notifications received from HMRC, being able to store them together with the reports.

What information must be stored digitally?

Companies must store the following information electronically for 6 years:

  1. Company name
  2. Company address
  3. VAT registration number
  4. VAT accounting schedules
  5. VAT calculations
  6. Adjustments applied

For purchase and sale of products, the information to be filed shall be:

  1. Date of Delivery
  2. Net value
  3.  VAT
  4. Adjustments or corrections made to VAT
  5. Total VAT
  6. Daily Gross Receipts

Digitization of tax compliance at a global level

EDICOM has developed a comprehensive solution designed for multinationals. It is a B2B2G electronic communications platform with EDI capabilities, including compliant e-Invoicing and VAT Compliance on a global level.

The challenge for global companies is dealing with local tax compliance. When multiple technology solutions are required for each country, the efforts are duplicated and inefficient. 

EDICOM's eVAT platform simplifies communication processes with tax authorities in multinational environments. It is the solution for those companies that operate in different markets from centralized management systems and must be able to process and send tax documents in accordance with the legislation in force in each country.

Check out our solution for Hungary, Portugal, Poland or Spain.

In addition, EDICOM as a Trusted Service Provider under the eIDAS Regulation guarantees the security and reliability of signature services, and thanks to the certification of the preservation of qualified electronic seals, also provides long-lasting electronic storage capable of maintaining the integrity and providing evidentiary value to documents.

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