Supplier statements can now be used to record expenses

HMRC’s latest update to its Making Tax Digital (MTD) policy is welcome news for businesses which use spreadsheet accounting.

When MTD was originally introduced on April 1, businesses were required to input individual purchases from suppliers – despite often making a single payment covering multiple invoices.

HMRC faced criticism for this controversial policy, which created additional work for businesses rather than its envisaged streamlined process.

However, in what many have viewed as a U-turn, VAT Notice 700/22 confirmed businesses can now use supplier statements to record input tax expenses as a single line.

While statements comprising invoices at more than one rate of VAT will still need to be recorded separately, the move should remove a layer of admin.

HMRC has also confirmed that the new rules can be applied to petty cash expenses – allowing businesses to record these receipts as a single total up to £50 per receipt and £500 per entry.

MTD will continue to evolve as HMRC continues to iron out teething problems but this change is a positive step in the right direction that will help businesses in the run up to the first compulsory returns deadline on August 7.

Do you have any questions about Making Tax Digital? Get in touch with our team to see how we could support you.