VAT HMRC digital reporting

Her Majesty’s Revenue and Customs (HMRC) is the United Kingdom (UK) government department responsible for collecting Value Added Tax (VAT). On April 1, 2019, HMRC implemented the Making Tax Digital (MTD) initiative. Under this initiative, UK VAT-registered businesses whose taxable turnover exceeds the VAT registration threshold must keep their records digitally. They must submit their returns digitally to HRMC. Businesses with a taxable turnover under the threshold can voluntarily submit their records digitally.

HMRC requires that businesses submit a VAT return monthly or quarterly. Businesses that meet MTD standards must maintain digital records in functional compatible software. Such software must be a software, spreadsheets, or a combination thereof, that can connect to HMRC through an Application Programming Interface (API). VAT returns must be submitted to HMRC through the software communicating digitally through the HMRC API platform.

VAT digital tax data record keeping is performed in SA MTD VAT Reporting. This function enables you to review and submit VAT records. Operators must have the correct security in SA Operator Setup-Function Security to access the SA MTD VAT Reporting function.

Note: If you use a third-party tax solution, such as Avalara's AvaTax or Sovos Global Tax Determination, VAT HMRC digital reporting is the responsibility of the third-party.

See Setting up VAT HMRC digital reporting.

Prerequisite setups

Before setting up VAT HMRC digital reporting, you must enable VAT functionality withing your company. Ensure you have specified the correct settings in these functions. See the online documentation for instructions about setting up these and tax-related functions.

SA Table Code Value Setup: VAT reporting is dependent upon the country in which the customer or the vendor resides. You must set up a correct country code for all countries that you conduct business in. Your Country code must meet the 2-character ISO 3166 standard.

SA Value Added Tax Setup: Set up VAT taxing jurisdictions and applicable rates for those jurisdictions. The number of jurisdictions may depend upon the customers and vendors you do business with.

SA Currency Setup: Set up exchange rates between currencies. The exchange rate that is specified is the number of domestic currency units that is equivalent to one foreign currency unit. You are responsible for maintaining the exchange rates.

Customer Setup: In the General tab, ensure that you have specified the correct Country code in the address that is associated with this entity. If the entity is used as part of a VAT tax calculation, this code is stored as part of the VAT information and is used for reporting purposes. Correctly set the taxability option. In the Taxing tab, specify the correct State and Tax Group.

Customer Ship To Setup: In the General tab, ensure you have specified the correct Country code in the address that is associated with this entity. If the entity is used as part of a VAT tax calculation, this code is stored as part of the VAT information and is used for reporting purposes. Correctly set the taxability option. In the Taxing tab, specify the correct State and Tax Group.

Vendor Setup: In the General tab, ensure you have specified the correct Country code in the address that is associated with this entity. If the entity is used as part of a VAT tax calculation, this code is stored as part of the VAT information and is used for reporting purposes. Correctly set the taxability option. In the Taxing tab, specify the correct State and Tax Group.

Vendor Ship From Setup: In the General tab, ensure you have specified the correct Country code in the address that is associated with this entity. If the entity is used as part of a VAT tax calculation, this code is stored as part of the VAT information and is used for reporting purposes.

Product Warehouse Product Setup: In the Taxing tab, indicate the Tax Group. Correctly set the taxability option.