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Taxation Help Sheets | Making Tax Digital

This help sheet outlines the options available with regard to maintaining digital records for the introduction of Making Tax Digital. The help sheet is based on current information and we will be updating clients prior to the implementation date of the 1st April 2019.

The help sheet is not exhaustive and ALAN REYNOLDS & COMPANY LIMITED cannot accept any legal responsibility with regard to any taxes or penalties that may become due.



From 1 April 2019, all VAT registered entities with an annual VAT-able turnover above £85,000 (the current compulsory registration threshold) have been mandated to keep a digital record of their VAT transactions. As well as having to file MTD-compliant VAT returns using API (Application Program Interface) enabled software for all VAT return periods commencing after 31 March 2019. This includes sole traders and partnerships, not just limited companies.

The goal of MTD is end-to-end digital transmission. HMRC will be requiring organisations to keep digital records for all transactions.  The requirement will be for importing source data to be processed and submitted digitally without any re-keying, and that includes manually copying and pasting. Links between programmes are possible, but they have to be digital, not manual.

HMRC requirements for maintaining digital records:

  • Details of all VAT transactions must be kept in a digital format
  • VAT transactions need to be preserved in a digital form for six years
  • the VAT return must be created digitally using the underlying digital VAT records
  • the VAT return must be provided to HMRC digitally using API enabled software
  • VAT data must be digitally transferred at all steps, including when it is submitted to HMRC.

Initially, only summary VAT return data need be submitted to HMRC. Supplementary data might be requested by HMRC at a later date. The nature and scope of what constitutes supplementary data has yet to be defined by HMRC.

To be MTD-complaint the software must:

  • Be capable of keeping records according to the legislation
  • Preserve records for at least six years
  • Submit MTD-compliant VAT returns
  • Provide supplementary data to HMRC if requested
  • Be capable of receiving HMRC information via APIs.


Many of our clients are already keeping digital accounting records using solutions such as Xero, QuickBooks, Quickfile and Sage, all these systems are MTD compliant.


If you are currently using Roseplan this will be supported by the use of bridging software we have obtained from our main software supplier, the bridging software will link to the VAT Summary tab and upload the data directly to HMRC. We will request your completed Roseplan on a quarterly basis and submit the return to HMRC on your behalf. If you do not have a copy of our Roseplan system, our package is a one-off cost of £40+VAT a quarterly charge of £65+VAT to link Roseplan to our accounting and VAT return packages to carry out the quarterly records control and MTD VAT filing.


Recently the big accountancy software providers have all started offering cloud accounting services available for a monthly cost and these providers have all built the requirements for maintaining digital records for HMRC. The benefits of using cloud accounting software include.

  • You can run your business from work, home or on your mobile while on the go.
  • It automatically downloads bank receipts and payments in real-time (QuickBooks no cost – Xero Additional cost.
  • You can use your mobile to photograph purchase invoices and expenses and upload these to the software; and
  • It’s on the cloud so you can get a clear view of your finances at any time, any place.

If you are thinking of choosing a cloud accounting service we can assist with our preferred partners, Xero, QuickBooks, Quickfile and Sage. If you have already starting thinking of going digital, please call our office as we may be able to offer a reduced rate compared to what is advertised online.

If you already use an alternative software solution to those listed above, please contact us to discuss whether it is MTD compliant and/or the cheapest option for your business.

Alan Reynolds & Company Limited 2022


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