What Are Digital Business Records?
Under MTD for VAT, the records you are required to keep to support your VAT returns must be kept digitally in what is known as ‘functional compatible software’. This will usually be either an accounting software package of some kind or a spreadsheet package. Certain data from business invoices and receipts must be recorded digitally but the invoices and receipts themselves do not need to be scanned and saved digitally, although they can be retained in this way. For more information on the data that must be retained digitally in functional compatible software, see HMRC’s guidance.
There is information on GOV.UK to help you choose accounting software or bridging software, including a tool which will help you narrow down the products that may be suitable for you. This is fairly basic at the moment but HMRC are working to improve the filter options within the tool.
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