Using MTD to process VAT obligations and liabilities

This topic is a general overview of the steps to process VAT obligations and liabilities with the "Making Tax Digital" (MTD) requirement in the UK.

Click the links in each step to see detailed information.

Prerequisite: See the help topic about setting up parameters and tax codes for MTD.

In a multi-site system, if your company has multiple sites that use the same VAT registration number, you can consolidate the VAT information for those sites, maintaining the consoldated information from one site. See Setting up MTD when multiple sites have the same VAT ID (VRN).

  1. Use the MTD Retrieve Obligations form to request and receive your VAT obligations from HMRC. You can retrieve your open (owed) obligations, fulfilled (paid) obligations, or both.
    An obligation is the requirement to send a VAT return for a particular date range.
    See Retrieving VAT obligations (MTD).
  2. Use the MTD Obligations and Returns form to calculate and verify the amounts to be included in each of boxes on the VAT Return form for the specified time range, which matches up with the obligation that you received.
    The calculated amounts for the return include tax amounts for transactions that include, but are not limited to, these types:
    • COs
    • POs
    • SROs
    • RMAs
    • Credits
    • Vendor returns
    • A/R and A/P direct transactions
    • Projects
    • General Ledger transactions that affect VAT

    You can click Enter Adjustments to amend the calculated amounts as needed, providing notes about the amendments for auditing purposes. The amendment amounts are added to the calculated amounts to produce the final value for each box on the VAT Return.

    You can also click View Transactions to view the transactions related to each box on the VAT Return.

    See Viewing and amending VAT obligation calculations (MTD).

  3. When the amounts are correct and confirmed, use the Submit Returns button on the MTD Obligations and Returns form to connect to HMRC and submit the VAT Return.
    See Submitting a VAT Return to HMRC (MTD).
  4. Use the Get Liability button on the MTD Obligations and Returns to retrieve your VAT liability amounts from HMRC. This information tells what you have already paid and how much you still owe. The liability is directly related to the obligation that you downloaded earlier.
  5. Use the MTD Obligations and Returns form, Payments tab, to view all the posted payments (amounts and dates) for a particular obligation.
    You can click the Get Payments button to update this with the latest information from HMRC.

    See Retrieving and paying VAT liabilities (MTD).

  6. Outside of the CloudSuite Business application, use the HMRC payment method facilities to pay the outstanding VAT bill.
    For your convenience, the Pay Liability button on the MTD Obligations and Returns can be used to connect to the HMRC payment facility.
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