Making Tax Digital

Making Tax Digital (MTD) is a principal component of the UK Government’s intentions to move tax reporting from manual input to a fully linked digital system

What you need to know

Complying with making tax digital means much more than selecting the right software. HMRC’s objective is to develop into one of the most digitally sophisticated, highly effective and streamlined tax administrative bodies worldwide. With Lumin Accountancy you can rest assured that you’ll be supported at every stage and equipped with an intuitive and 100% compliant Making Tax Digital solution, to make your digital transition painless.

The first stage of MTD was launched in April 2019, all VAT registered businesses without any complex issues (like groups, special retail schemes etc) had to present data directly to HMRC digitally, using the appropriate accounting software and ensure their records are kept in a compliant format.

Lumin are here to help every step of the way with MTD:


MTD compliance and reporting can work around your current system without the need to switch to a new software package.


MTD solutions present the opportunity to review how things are currently being done, which can have a drastically positive effect on efficiencies


Clients who are going through the MTD pilot with us have said how much easier it is to complete and manage their VAT – from data capture to submission.

The Making Tax Digital Transition Q & A

We have established proven methods to ensure all of our clients are steered through this transformation with the minimum of disruption to your business. We’ve produced the following as a guide based on the most popular questions asked.

Who does MTD for VAT affect?

All VAT-registered businesses with a turnover in excess of £85,000 will be required to comply with Making Tax Digital for VAT.

When does MTD for VAT come into force?

MTD for VAT comes into force for VAT periods commencing on or after 01 April 2019. For businesses submitting monthly VAT returns, their first return to be compliant with MTD will be their return for April 2019.  For businesses submitting quarterly returns the first VAT return to be compliant with MTD will be for the quarter ended 30 June 2019.

I am registered under the annual accounting scheme, does MTD affect me?

Yes, you too will be required to submit your annual VAT return using MTD compliant software. There are no expected changes to the way in which traders pay their VAT liabilities under the annual accounting scheme.

I currently use the flat rate scheme for VAT. How will this change under MTD?

You will be required to submit your VAT returns through MTD compliant software. As the flat rate scheme VAT payable is calculated from the business sales, only the sales records will need to be kept digitally, and any capital goods in excess of £2,000 (inclusive of VAT).

What are digital records?

Digital records are the main difference between the MTD for VAT and the current online filing of VAT returns. The new VAT regime require a seamless audit trail from the digital VAT account to HMRC’s systems, via a prescribed software gateway (API). Businesses within the scope of MTD will need to maintain digital records of every transaction that affects their VAT position, and preserve those digital records in support of their returns in the same way as for physical records under the online filing process.

Will I have to create electronic copies of my sales invoices and purchase invoices for retention?

No – a digital image of each invoice is not required.

In what format do my digital records have to be stored?

It is up to the business how they wish to record their digital records. Records can be kept directly in an integrated accounts package, such as Xero/Quickbooks, or in a separate system such as an Excel spreadsheet. However, the record must be capable of automated transfer into the process which creates and submits the MTD compliant VAT return.

What info do I need to record digitally for my sales & purchases?

For sales the digital record has to include; the time of the sale, the value of the supply and rate of VAT charged For supplier invoices the digital record must include; the time of any supply, the value of supply (including any VAT not claimable) and amount of input tax to be claimed.

What information do I need to record digitally for my sales & purchases?

For sales the digital record has to include:

  • the time of the sale,
  • the value of the supply,
  • rate of VAT charged on it

For supplier invoices the digital record must include:

  • the time of any supply,
  • the value of supply (including any VAT not claimable)
  • the amount of input tax to be claimed.

Will I be able to submit my VAT returns using my excel spreadsheets?

Yes, but for now using complementary software is likely to be the only practicable route. The information needs to be submitted to HMRC via an API.

We recommend importing the data from your spreadsheets into a compatible accounting package such as Xero/Quickbooks, or alternatively to use bridging software which takes the date from your spreadsheet and allows this to be submitted to HMRC via an API.

What happens if my turnover drops below £85,000 per annum after joining the MTD regime?

If you wish to remain registered for VAT, you will need to continue to submit VAT returns under MTD once you have joined the scheme, regardless of whether your annual turnover has dropped below £85,000.

Under MTD for VAT, what additional information will HMRC receive?

HMRC will receive exactly the same information as it does under the current system. The new system removes the chance of entering the wrong figures in the VAT boxes when submitting the VAT return as the data is submitted direct from the software.

Will the EC Sales list also be covered by MTD?

No, the EC sales list is not covered by MTD and therefore will need to be submitted in the same way following the introduction of MTD.

I am a retailer carrying out large volumes of sales of small values daily. Do I need to record each transition digitally?

No, retailers within a retail scheme can record end of day/end of week reports in a digital format for VAT reporting under MTD. There is also no need to apply for this exemption, provided you are registered under a retail scheme.


We will carry out a thorough review of your existing accounting systems, not only to ensure you are compliant with Making Tax Digital but also to ensure your business is operating efficiently by utilising the newest cloud accounting software available. This will in turn, reduce the amount of time spent on your administration, allowing you to concentrate on the more important aspects of your business.


Following our review, we will put together recommendations of improvements, either working with your existing systems, or by switching to a more streamlined software package. We will help you implement these changes to your accounting systems in readiness for Making Tax Digital. We also offer training on any of the software we recommend, and we are partners with all major cloud accounting software providers, meaning you will have a helping hand every step of the way.


With the ever-changing world of technology, we will continue to monitor your systems ongoing, ensuring that they are helping you achieve your objectives, whilst also remaining compliant with HMRC. Streamlining your processes will ensure you are spending the least amount of time carrying out administrative duties.

Need advice with Making Tax Digital?

For further information on Making Tax Digital, please get in touch.

Contact Information

Swansea Office

Suite C, Floor 10
Princess House
Princess Way

Ystradgynlais Office

The Forum Business Centre
3 Brecon Road

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