Using Making Tax Digital for VAT with NAV and Business Central
Making Tax Digital (MTD) has now gone live with surprisingly few problems, especially for anyone using a supported version of Microsoft Dynamics NAV® or Business Central®, save for some platform compatibility issues that need to be resolved by your partner. Some issues have come to light however as the software has been rolled out and this blog lists some of these and how to deal with them.
Signing Up For MTD
Once the software has been installed in your database, you need to sign up for MTD with HM Revenue and Customs. This process is quite simple provided you have the necessary information to hand which is:
- Your Government Gateway username and password;
- Your VAT Registration No.;
- Your business name and address as used for your VAT Registration;
- A contact email to receive communications from HMRC.
You will receive a confirmation email from HMRC almost as soon as you have signed up for MTD but your account will be “frozen” for two to three days after this so you won’t be able to submit a Return or retrieve your VAT obligations during this period.
Remember, once you have signed up for MTD the process cannot be reversed – there is no going back!
If you have signed up for MTD using different software than NAV or Business Central you can easily transfer this to NAV (and why wouldn’t you? 😊). To do this, you need to sign on to the Government Gateway for VAT, navigate to the MTD section and cancel the authority for your current provider. You then need to wait for two to three days and sign up to use the NAV software. You MUST sign up with another software provider before you try to submit your next VAT Return.
Using The MTD Software
There are a few things that can cause problems when using MTD for VAT which we’ll now run through.
VAT Registration No.
The VAT Registration used by MTD is shown in the Company Information page. This has to be in the format 123456789 with no other letters or spaces e.g. gaps or the GB letters at the front of the no.
It’s important that whoever is making the MTD returns has all the permissions they need to use the functionality. The best way to do this is to create a new Permission Set which has full Tabledata permissions for the tables used for MTD. You can then add this Permission Set to whoever needs to make MTD submissions.
VAT Returns submitted by MTD MUST be based on a VAT Statement in NAV. This statement cannot be adjusted who it has to contain the correct figures. Information on creating a VAT Statement is contained here. There are some things to look out for in the statement as follows:-
- When posting VAT transactions, you need to make sure that anything posted to your VAT Control accounts is matched by a corresponding VAT Entry i.e. you should not post directly to those accounts unless the transaction is VAT-only
- The figures that make up the statement should all be positive (but see below) and of course add up
- All the amounts in Boxes 1, 2, 3, 4, 6, 7, 8 and 9 must be positive. The figure in Box 5 must be positive if VAT is to be paid to HMRC and negative if it is to be reclaimed from them
When populating the VAT Return for submission you will be prompted to specify the VAT Statement you want to use as well as these options:
- Include VAT Entries first option – this should be set to Open
- Include VAT Entries second option – this should be set to Before and Within Period
Once a Return has been finalised and submitted, you should always run the Calculate and Post VAT Settlement routine with the following options:
- Starting Date – leave blank
- Ending Date – set this to be the end date of the period you have just submitted the VAT Return for
- Posting Date – this will be the same as the Ending Date
- Document No. – a suitable Document No. of your choice
- Settlement Account – this will be your VAT Payable G/L Account
- Post – this option should be ticked
You don’t need to set any filters for the report unless you make multiple VAT Returns within the same company i.e. you are registered for VAT in more than one country and have to make separate returns to each of them.