Making Tax Digital for VAT
Making Tax Digital for VAT – The VAT account provides the link between the digital VAT records and the VAT return submitted to the Revenue.
Under Making Tax Digital for VAT, the information which must be held in the VAT account must be maintained digitally. This is referred to as the ‘electronic account’.
To demonstrate a link between the output tax in the business records. Also the output tax on the VAT return, the electronic account must contain a record of:
- the output tax owed on sales
- output tax owed on acquisitions from other EU member states
- any tax to be paid on a supplier’s behalf under a reverse charge procedure
- any tax owed following a correction or error adjustment
- and other adjustment required by the VAT rules.
Similarly, the link between the input tax in the business records and the input tax on the VAT return, the electronic account must contain a record of:
- the input tax which can be claimed on business purchases
- input tax allowable on acquisitions from other EU member states
- tax that can be reclaimed following a correction or error adjustment
- as well as, any other necessary adjustment.
Where adjustments are required, only the total value for each type of adjustment will need to be kept digitally.
While the underlying calculations don’t have to be made digitally or using software. This can be performed manually or by using spreadsheets if preferred. However, using software should reduce the risk of errors.
The electronic account is vital. All information held in it will be used to calculate and complete the VAT return using functional compatible software.
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