Making tax digital: use of supplier statements

Someone sorting invoices with calculator with laptop and receipts sitting on desk

Often businesses who receive multiple invoices from the same source will record the value of each supply from a supplier statement instead of individual invoices. Previously HMRC required companies to record every single purchase invoice in a digital format for tax purposes, however, as of the 5th May 2019, HMRC has relaxed the guidelines to make it easier for businesses who are impacted by this. Here’s what you need to know.

 

While HMRC’s view remains that it is best practice to record the individual supplies digitally as this means less risk of invoices either being missed completely, being entered twice or the wrong rate of VAT being applied. HMRC does recognise that there may be additional work for a business in capturing individual supplies digitally, and this in itself could lead to data entry errors.

Therefore, HMRC will now accept the recording of totals from a supplier statement where all the supplies on the statement relate to the same VAT period, and the total VAT charged at each rate is shown.

However, if you choose to do this, you must also cross-reference all supplies on the supplier statement to invoices received, but this can be done outside of your digital records.

You can find information on the update to VAT Notice 700/22, section 4.3.3.1 on the HMRC website.

 

More than one rate of VAT?

If you have a supplier statement which comprises more than one rate of VAT, then you will still need to record the individual totals to show the different VAT rates.

 

Petty Cash transactions

In the same Notice under section 4.3.3.3, HMRC updated their guidance on recording petty cash transactions.

Where a business uses petty cash to pay for small value items, these do now not need to be individually recorded in the digital records. The business can record the total value and the total input tax allowable. This applies to individual purchases with a VAT-inclusive value below £50 and the total value of petty cash transactions recorded in this way cannot exceed a VAT-inclusive value of £500 per entry.

 

Further information

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