Hi guys! As you may know, MTD will be mandatory for all VAT registered businesses from April 2022. My next VAT return will cover July 2021 - June 2022, therefore I have been told that I should start using the MTD method of accounting already so that my next return has all the necessary “digital links” for the whole period.
After carefully reading the requirements stated in the VAT Notice 700/22 about MTD, I have “mentally planned” how I will start using Quickfile from now on, but I would like you to kindly confirm if this approach is the correct one and the most efficient in my particular case, so that I won’t find myself in the need of correcting everything last minute just because I didn’t understand correctly how to approach this new method of bookkeeping.
- My business: I import goods from third countries and sell them on online marketplaces to UK customers and businesses (with UK VAT registration, Flat Rate scheme) or on online marketplaces to EU customers and business (with German VAT registration, EU OSS scheme, so all Out of Scope). I also rarely sell digital products/services on online marketplaces to customers in third countries.
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Purchases: My business is VAT registered with Flat Rate, this means that I am not asked to keep a digital record of my expenses unless they are reverse charge purchases (VAT Notice 700/22, par. 4.3.5 and par. 4.6) or capital expenditure goods (which I never have).
(1) Out of scope and regular VAT purchase invoices and payments will be entered manually;
(2) Reverse charge purchase invoices and payments will be entered manually too but there will also be the pdf invoice attached; -
Sales: I am required to provide a digital link for all the sales made on online marketplaces from the UK unless the marketplace itself is responsible for VAT (VAT Notice 700/22, par. 4.3.2 and 4.3.2.1 + Guidance VAT rules for supplies of digital services to consumers).
(4) For direct sales of digital goods/services to UK customers/businesses, the invoices and payments will be entered manually;
(5) The sales of digital goods/services to customers/businesses made on online marketplaces (where the marketplace itself is responsible for VAT) are Out of Scope, so these invoices and payments will be entered manually;
(6) For sales of physical goods on online marketplaces to UK customers (where my business is the one responsible for VAT) I should find a proper CSV report with the mandatory data to upload on Quickfile; from there I should create the invoices and the payments.
Firstly, is this method acceptable and the most efficient?
Secondly, as you may guess, point (6) is where I have most doubts.
There are many types of reports that I can download from Amazon, most of them merge together the transactions of all the marketplaces (while I only need the UK ones), some include both sales and expenses (I don’t need the latter), none of them show the VAT rate or the net values (which are mandatory).
- There is a report from Amazon that contains just the sales but for all the countries. I could use that one to create both the UK sales and also those that are out of scope, also to make my method easier, but in the spreadsheet there are also the credit notes for some returns. How can I do this without editing the original data and providing the digital link also for the credit notes?
- I know that I can add some columns with formulas to create the net value amounts, but I would have to input some data like the VAT rate manually anyway, is that allowed? And if so, what should I put to make the invoice Out of Scope for the third countries sales? If I put 0, it would still be counted as a zero-rated VAT sale, what should I put instead?
Thanks for your patience in reading this long post, and for the grammar errors (English is not my first language), hope you can help me find the best way to use this software with MTD.