Don’t Get Caught Out By New Digital Record Keeping Requirements
At our Making Tax Digital workshop on Friday 8 March 2019 as part of Enterprise Week, we found a common misconception arising in relation to the new digital record requirements of the system.
The confusion is that paper records are adequate so long as the totals are recorded in MTD compliant software. Unfortunately this is not the case. With some very limited exceptions, each and every transaction must be recorded electronically.
Taking totals from paper records and recording those totals electronically does not meet the requirements of MTD. The VAT regulations require a separate electronic record for each VAT supply made or received. The regulations do allow multiple supplies on a single invoice to be recorded as a single supply, subject to certain conditions. Recording totals from paper records electronically does not meet this requirement and record keeping penalties could apply.
Businesses using a retail scheme cam keep a record of Daily Gross Takings (note daily, not weekly or longer) and not every single transaction.
It is not “illegal to keep paper records” but these records must logged entry by entry into software which is likely to be very inefficient but is not illegal.
The best solution to overcoming this challenge is to adopt cloud accounting software for your business. It’s vital to get this done properly. We have helped dozens of small business owners to implement Xero and Receipt Bank for their business, saving weeks of time each year on their bookkeeping and finance function.
Talk to us now about how to implement cloud accounting solutions for your business.
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