From April 2019, businesses (companies and sole proprietors) who are VAT registered, and have fees above £85,000, will have to keep and maintain their VAT records digitally and submit their VAT return information to HMRC through Making Tax Digital ("MTD") functional compatible software.
Functional compatible software
This is a software program which can connect with HMRC via an Application Programming Interface (API).
This means that a business must keep records in a digital form, be able to create a VAT return from the digital records and be able to provide HMRC will VAT data and receive information from HMRC via their API platform.
Content of digital records
The records that must be kept digitally will, as a minimum, include supporting information to the nine boxes that are required to be reported to HMRC on current VAT returns.
Other information
It appears that additional information may have to be provided. This may include output VAT payable and input VAT claimable, split between the standard, reduced, zero, exempt and outside of the scope VAT rates, dates of fee notes and, for business expenses, the dates of invoices and the rate of VAT paid.
Start date
VAT return periods starting on or after 1 April 2019.