Making Tax Digital is a key part of HMRC’s plans to further digitalise tax affairs in the UK. This journey has started with the introduction of MTD for VAT. VAT-registered businesses will have to submit VAT periods from April onward via MTD. Some businesses with more complex VAT requirements may be exempt from this deadline. Visit the HMRC website to find out more about this.
Dynamics for Finance and Operations has recently released updates to support communications with HMRC. This functionality and process is documented on Microsoft docs. The documentation provides insight in the necessary configuration steps.
I have tested this functionality and would like to share my insights. The documentation Microsoft provide quite detailed and doesn't need any further explanation in my opinion. I do however have the following recommendations:
Ensure that the latest version of Dynamics for Finance and Operations is installed. I recommend using version 10.0.1. which is now available for public use. You may experience complications when importing Electronic Reporting (ER) configurations using previous versions. Therefore, ensure you’re all up-to-date.
Refresh your entity list in Data management. When you follow the suggested configuration steps by Microsoft you will notice that most of the configuration is completed by import jobs using data management. New data entities have been provided to do so. The system doesn't provide any warning messages if the entity on the manifest and data package is missing in your system. Refreshing the entity list will ensure these new entities are available and all setup is completed when the setup file is loaded.
In order to test the configuration in Dynamics for Finance and Operations you can create your own test application via the website of HRMC. Simply register an account and login. You can skip past the 2-step verification as it is not required for testing purposes. After sign-in you can create a sandbox application via ‘add an application’. Complete the setup and navigate to ‘manage API subscription’. Enable the following API’s – VAT MTD and Test support API’s – create test user. After you have registered your Application and activated the API's, you can use the application to test your setup in Dynamics for Finance and Operations. Click manage credentials to retrieve the Client id, Client secret and Server token from your test sandbox, you will need those once you have reached step: 'Obtain an authorization code for the sandbox environment'.
To summarize:
Ensure you use at least version 10.0.1 of Dynamics for Finance and Operations.
Refresh the data entity list in the data management workspace.
Create a HMRC sandbox application.
Afterwards you can complete the configuration steps detailed by Microsoft:
Import and set up Electronic reporting (ER) configurations.
Set up application-specific parameters.
Import a package of data entities that include a predefined electronic message setup.
Set up General ledger parameters.
Define a sales tax settlement period.
Set up security roles for electronic message processing.
Set up security roles to access the token of the web application.
Initialize the web application for interoperation with HMRC.
Obtain an authorization code for the sandbox environment (for testing purposes only).
Obtain an authorization code for the production environment.
Obtain an access token.
Useful links:
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