Contents

Introduction

Making Tax Digital (MTD) is UK governments plan to streamline and modernise their tax system to make it more efficient and easier for customers to comply with their tax obligations. MTD requires businesses to record business transactions digitally and provide their VAT return information to HM Revenue and Customs (HMRC) through MTD compatible software either monthly, quarterly or on an annual basis. It is mandatory for business with tax turnovers above the VAT registration threshold from 1st of April 2019. Under MTD scheme, customers can interact digitally with HMRC to submit & retreive information via API/bridging software.

VAT data requirements

The following data is required to be submitted to HMRC under the MTD.

Data	Description
VAT due sales	VAT due in this period on sales and other outputs
VAT due acquisitions	VAT due on goods in this period on acquisitions from other EC member states
Total VAT due	Total VAT due (sum of 1 & 2)
VAT reclaimed	VAT reclaimed in this period on purchases and other inputs (including acquisitions from EC)
Net VAT due	Net VAT to be paid to Customs or reclaimed by you (Difference between 3 and 4)
Total sales ex VAT	Total value of sales and all other outputs excluding any Tax. Incl 8
Total purchases ex VAT	Total value of purchases and all other inputs excluding any VAT. Incl 9
Total goods supplied ex VAT to EC	Total value of all supplies of goods and related services, excluding VAT to EC
Total acquisitions ex VAT from EC	Total value of all acquisitions of goods and related services, excluding VAT from EC

View business rules

Business rules setup

The following business rules have to be setup to handle MTD process. Business rules for MTD process must be setup with support from Iptor IP1 consultants. It is critical to understand the setting of control files and how it works. Control files must be setup correctly for the system to operate as intended. Any changes to the control files setup should be addressed cautiously and in consultation with Iptor IP1 consultants.

Note	This document does not cover customised setup tasks of specific companies. Deviations from this setup should be covered by setup tasks written by individual companies.

Business rules

Setup

********/TX-ENTY Tax Entity

This control file holds the entity/organisation the VAT report would be submitted to & from, along with the company’s tax registration number & related information like reporting currency, start of the year for tax reporting and how often the tax report is to be run.

Note

The company’s tax registration number must setup in the system already. (Menu: Base>Distribution>Masterfiles>Database Management>Other>Work with VAT).hmr

********/TX-PGM Tax programs

This system defined control file holds the tax programs used to calculate the required tax data.

******/TX-TXBX Tax Boxes

This control file describes all the data requirements (held in tax boxes). HMRC requires the following data (9 in total).

********/TX-TXBXG Tax Boxes sequence

This control file holds the box groups with the applicable tax boxes.

********/TX-TXBX1 Tax Boxes – Final step after extraction

Some of the required tax data is derived from the calculated data. This control specifies how these values are derived after the calculations are run.

********/TX-DFDS1 Selection criteria to define Box Group

Defines the selection criteria for Box group.

********/TX-DFAP Selection criteria to define Box Group – AP

Defines the selection criteria for Box group.

********/TX-DFARA Selection criteria to define Box Group – AR

Holds AR Payment type selection criteria.

********/TX-DFARB Selection criteria to define Box Group – AR

Defines the selection criteria for Box group.

********/TX-DFGLA Selection criteria to define Box Group – GL

Holds GL Journal type selection criteria.

********/TX-DFGLB Selection criteria to define Box Group – GL

Defines the selection criteria for Box group.

Procedure

It is your responsibility to ensure that you understand this procedure before performing the following tasks.

Note	Deviations from this procedure should be covered by procedures written by your company. Before performing any tasks please ensure all the business rules are set-up accordingly.

MTD process

Process

Steps

Create report request

Menu: Base>Distribution>Masterfiles>Database Management>Other>Work with VAT report. (VTW050).
Select the entity you are running the tax reporting for and click OK. VAT registration would default from the setting in control ********/TX-ENTY. The existing requests would be listed for the selected entity.
Click Add to create a new request.
Select the entity you are creating the request for, from TMSRY/TX-ENTY.
Enter the End of period for the VAT report. If SOY is January and the reporting frequency is quarterly then report needs to be generated for March, June, September and December.
Enter a description and click OK to save the request.

Run VAT calculations & view calculated data

Select the request and use option Calc. The system would calculate the required data based on the selection criteria defined in the control files and populate the applicable tax boxes.
You can view the data populated in the tax boxes using option Select.

Note

The calculation process can be re-run anytime to pickup all the latest transactions and updates. The tax boxes would be re-populated on each calculation.

Check VAT calculations

To check the calculations, select the request and use option Post. This will produce an excel report with all the required data for submission. The status of the report request would change to ‘P‘ for posted.
Check the report, make any adjustments if required and re-run the calculation.

Submit/Finalise VAT report

Once all the tax data is reviewed to be accurate, it can be submitted to HMRC.

Select the request and use option Finalise. Currently this produces an excel which can be submitted to HMRC. The status of the report request would change to ‘C‘ for complete. Calculations can not be re-run once the report is finalised.