Making Tax Digital - Submitting VAT Returns | Microsoft Docs

Her Majesty's Revenue and Customs (HMRC) is implementing the first step of Making Tax Digital, which imposes new requirements on VAT registered businesses above the VAT threshold. Requirements will be implemented in phases. In the first phase, with a deadline in April, 2019, the following requirements will take effect:

• Keeping records digitally - Businesses must now keep all their records digitally. For users of ERP systems this will not have any impact since they already keep their records digitally in these systems.
• Submit VAT return electronically using software recognized by HMRC.

Business Central already supports submitting VAT returns to HMRC using the GovTalk service. From April, 2019 HMRC is switching to newer technology and communication mechanisms that required changes in Business Central .

Making Tax Digital for VAT Capabilities in Dynamics 365 Business Central

In Business Central you can use the VAT Return report for creating VAT reports. The Making Tax Digital VAT features extend this capability to communicate with HMRC. For example, the Making Tax Digital VAT extension lets you:

• Retrieve VAT obligations from HMRC
• Get reminded about VAT obligations that are approaching or already past due
• Submit VAT returns to HMRC
• View the VAT return
• View VAT payments with HMRC
• View VAT liabilities with HMRC

Set up Making Tax Digital for VAT

The Making Tax Digital feature uses a service connection to communicate with HMRC. To make it easy to establish communications, Business Central provides the HMRC VAT Setup service connection, which contains most of the information needed to communicate with HMRC. To finish the connection, you must give the Dynamics 365 Business Central MTD VAT application the authority to interact with HMRC on your behalf. Microsoft manages the Dynamics 365 Business Central MTD VAT application on the HMRC web site, and the application is a requirement for the connection. You give permission by requesting an authorization code from HMRC, and then copying the code to the service connection. The following steps describe how to set up the service connection.

1. Choose the icon, enter Service Connections, and then choose the related link.

2. On the Service Connections page, choose HMRC VAT Setup.

   NOTE

   If you use an on-premises version of Business Central you will also need to provide a client ID and client secret. If you are not sure what these are, contact your partner. They can get the information for you on PartnerSource.

3. To open a GOV.UK website and request an authorizaton code, choose Process, then Request Authorization Code, and then choose Continue.

4. Sign in with your HMRC credentials. To allow the Dynamics 365 Business Central MTD VAT application to interact with HMRC on your behalf, choose Grant authority.
5. A confirmation page displays "Authorization granted" and an authorization code. To copy the authorization code, choose Copy.

6. Return to the service connection you are setting up, and paste the authorization code in the Enter Authorization Code field. Then choose Enter.

   NOTE

   Business Central will use the authorization code to test whether the service connection can communicate with HMRC. If the connection is successful, a confirmation page prompts you to verify your VAT registration number. To open the Company Information page and verify the number is correct, and the one you have used to register with HMRC, choose Yes.

Additional Setup Requirements for On-Premises Versions

1. You must add a VAT report configuration on the VAT Reports Configuration page.

   a. Create a new configuration, and choose the VAT Return type.
   b. Give the configuration a descriptive name, such as HMRC MTD.
   c. In the Suggest Lines Codeunit ID field, choose codeunit 745.
   d. In the Content Coneunit ID field, choose codeunit 10531.
   e. In the Submission Codeunit ID field, choose codeunit 10532.
   f. In the Validate Codeunit ID field, choose codeunit 10533.
   g. Fill in the remaining fields as necessary. Hover over a field to read a short description.

2. You must edit the VAT report setup on the VAT Report Setup page.

   a. Expand the Return Period FastTab.
   b. In the Report Version field, choose the VAT report configuration that you created in the previous step.
   c. In the Manual Receive Codeunit ID field, choose codeunit 10534.
   d. In the Receive Submitted Return Codeunit ID field, choose codeunit 10536.
   e. Optional: If you want to automatically update the information about VAT obligations, specify how often to do so in the Update Period Job Frequency field, and then specify codeunit 10535 in the Auto Receive Codeunit ID field.
   f. Fill in the remaining fields as necessary. Hover over a field to read a short description.

VAT Obligations

HMRC maintains a list of VAT obligations for companies, which are the periods for which they must report VAT and the due date for the report. HMRC exposes this information through their APIs, which enables Business Central to retrieve the obligations. Business Central stores VAT obligations as VAT Return Periods, and uses them to:

• Remind you about VAT returns that are due or overdue.
• Automatically enter start and end dates when you create VAT returns.

To retrieve the VAT return periods from the HMRC:

1. Choose the icon, enter VAT Return Periods, and then choose the related link.
2. On the VAT Return Periods page, choose Process, and then choose Get VAT Return Periods.
3. Enter the Start Date and End Date to specify the period for which to get the VAT return periods, and then choose OK.

The VAT obligations are now retrieved from HMRC and you can view them on the VAT Return Periods page. A confirmation page shows how many obligations were retrieved.

VAT Returns

Use this report to submit VAT for sales and purchase documents, such as purchase and sales orders,invoices, and credit memos.

To create and submit a VAT return:

1. Choose the icon, enter VAT Return Periods, and then choose the related link.
2. On the VAT Return Periods page, choose Process, and then choose Create VAT Return.
3. If you want to open the VAT return, on the confirmation page, choose Yes.
4. On the VAT Return page, to calculate and prepare the amounts for the VAT return, choose Process, and then choose Suggest Lines.
5. Fill in the fields as necessary, and choose OK. VAT amounts display in the Report Lines section on the VAT Return page.
6. To release the VAT return and prepare it for submission, choose Process, and then choose Release. After you release a VAT return you cannot edit it. If you need to change something, you must reopen the return. Releasing the VAT return does not submit it.
7. To submit the VAT return to HMRC, choose Process, and then choose Submit.

VAT Liabilities and Payments

If you want to check the status of your VAT, you can retrieve information from HMRC about your VAT liabilities and payments. VAT liabilities are the amounts that you owed to HMRC, and show if there are outstanding amounts to be paid. VAT payments are the actual payments your company has made to HMRC.

To retrieve VAT liabilities:

1. Choose the icon, enter VAT Liabilities, and then choose the related link.
2. On the VAT Liabilities page, choose Process, and then select Get Liabilities.
3. Enter the Start Date and End Date of the period to retrieve VAT liabilities for, and then choose OK.

The VAT liabilities are now retrieved from HMRC and you can view them on the VAT Liabilities page. A confirmation page shows how many liabilities were retrieved.

To retrieve VAT payments from HMRC:

1. Choose the icon, enter VAT Payments, and then choose the related link.
2. On the VAT Payments page, choose Process, and then choose Get Payments.
3. Enter the Start Date and End Date of the period to retrieve VAT payments for, and then choose OK.

The VAT payments are now retrieved from HMRC and you can view them on the VAT Payments page. A confirmation page shows how many VAT payments were retrieved.

See Also

United Kingdom Local Functionality
The GetAddress.io UK Postcodes Extension
Customizing Business Central Using Extensions
Working with Business Central

© 2019 Microsoft. All rights reserved.