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Making Tax Digital Workflow

Her Majesty's Revenue and Customs (HMRC) implemented the first step of Making Tax Digital, which imposes new requirements on value-added tax (VAT) registered businesses above the VAT threshold. The HMRC capabilities are standard in Microsoft Dynamics 365 Business Central. For more information, see Making Tax Digital in the United Kingdom.

Multi-Entity Management extends the HMRC capabilities such that each entity can have its own VAT registration number, or each entity can belong to a HMRC group that uses a common VAT registration number.

The Multi-Entity Management Making Tax Digital Connector is a separate connector that works with Microsoft Dynamics 365 Business Central. The connector is available from the Microsoft AppSource.

Standard Setup

In Microsoft Dynamics 365 Business Central, ensure to set up the following to be able to use the HMRC capabilities: 

On the Company Information page, specify the VAT registration number. This VAT registration is used for all entities where no VAT registration has been specified.

MEM Setup

To set up the VAT registration numbers for individual entities or groups, use the following pages: 

  • MEM HMRC Group Setup: For entities that use the same VAT registration number, create a HMRC group, where you enter the VAT registration number, select the VAT number series, and select the entities that belong in the group.
  • MEM Entity Setup: For entities that use an individual VAT registration number, enter the VAT registration number and set up the number series.

After the VAT registration numbers are applied to the company and the entities and MEM HMRC groups, the capability for communication to the HMRC must be set up. Use the MEM HMRC VAT Setup Status to set up the connection with the HMRC.

Create and Submit a VAT Return

To generate a VAT return, review the Microsoft Dynamics 365 Business Central documentation: To create and submit a VAT return. When creating and submitting a VAT return, you can select the MEM HMRC group for the transaction.

VAT Return Periods, Liabilities and Payments

For reviewing, creating, and processing VAT-related records the MEM HMRC group is available as a read-only value or an editable value where you can choose the MEM entity or MEM HMRC group to get or process records. For more information, see VAT Returns, Liabilities, and Payments.