SALF1200 | Self Assessment: the legal framework: Making Tax Digital: Obligation to keep digital records

A relevant person must keep digital records for each digital obligation tax year and use functional compatible software to maintain these records.

The digital records required for a digital obligation tax year include:

• Records of financial information required to be included in each quarterly update for that tax year and the annual tax return

• Itemised details of financial information, including amounts and the dates received or incurred

• Any additional records specified by HMRC as relevant to ascertaining the financial information above

Digital records must be kept in such form as the Commissioners specify by direction and recorded by the following deadlines:

• For quarterly updates: no later than the date the update is given or required to be given, whichever is earlier

• For all other records: no later than the date the tax return is delivered or required to be delivered, whichever is earlier

The Commissioners may also specify a subset of digital records by direction that a relevant person may elect to keep instead. There are specific digital record keeping treatments for:

• a relevant person with jointly let property

• relevant activities with annual turnover below the VAT registration threshold from either self-employment or UK property

• retail sales of the relevant activity of a retailer

See the Gov.uk website for more details.

The requirement imposed by regulations is in addition to, not in place of, any other record keeping requirement that the person or partnership keep and preserve records e.g. section 12B Taxes Management Act 1970.

Failure to comply with record keeping requirements set out in regulations may incur a penalty of up to £3,000. NB a person will not be liable for this penalty if there is a penalty charged under s.12B(5) TMA 1970 in relation to that period.