The first relates to petty cash and small transactions. The rule for digital record keeping strictly speaking means every individual supply received e.g. a pint of milk, a packet of biscuits, should be recorded separately within the digital records. The update provides a relaxation to this, in that a number of petty cash items may be combined and entered into the digital records as one purchase. However, there are restrictions in that the value is capped – individually the petty cash items must be less than £50 including VAT, and any batch of petty cash items put in the digital records cannot exceed £500 including VAT. All that businesses now need to do is record the total value and total input tax allowable. A suggested practical procedure is to do this either daily, weekly or monthly, dependent upon the frequency and value of the petty cash expenditure, and attach the receipts to a cover sheet detailing the breakdown and total entered.
The second relaxation concerns the situation where multiple invoices are received from the same supplier. This is particularly useful in high volume, low value purchase patterns. Now businesses will be able to post supplier statement totals instead of each individual invoice. To take advantage of this exemption, the invoices on the statement must relate to the same VAT period and the same VAT rate must be applicable to all invoices. The business must also cross-reference all individual supplies appearing on the supplier statement to the actual invoices received, but that may be done outside of the digital records. In practical terms, the total of the statement is posted, and the invoices are stapled to the statement as back up and filed.
The final relaxation may benefit people who let property through an agent. The relaxation now allows a monthly summary of rent collected and VAT charged received from the agent to be recorded as if it were a single sales invoice to create its digital record.
For further advice please get in touch with your normal Haines Watts contact.
Want to know more? Call us on 01392 260310 or email email@example.com