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United Kingdom - Making Tax Digital for VAT In Dynamics 365 For Finance And Operations

Adam TrukawkaElizaveta GolubMicrosoft Dynamics Globalization

This presentation contains Microsoft Confidential Information. Microsoft may use any suggestions, comments, or other feedback that you provide for any purpose without obligation. This presentation is provided for informational purposes only and represents Microsoft’s view as of the presentation date. Microsoft cannot guarantee the accuracy of any information after the presentation. Because Microsoft must respond to changing market conditions, it should not be interpreted as a commitment on Microsoft’s part. This presentation is provided “as-is”.

Microsoft Dynamics 365 for Finance and Operations solution for Making Tax Digital for VAT in the United Kingdom is pre-release software under development. All dates and features specified are preliminary, are based on current expectations, and are subject to change without notice. Microsoft may make changes to specifications and product descriptions at any time, without notice.

Sample code included in this presentation is made available AS IS. THE ENTIRE RISK OF THE USE OR THE RESULTS FROM THE USE OF THIS CODE REMAINS WITH THE USER.

MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION. NO LICENSE, EXPRESS OR IMPLIED, BY ESTOPPEL OR OTHERWISE, TO ANY INTELLECTUAL PROPERTY RIGHTS IS GRANTED BY THIS PRESENTATION.

© 2019 Microsoft Corporation. All rights reserved.

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GlobalizationTools &Services

Localizationsby Microsoft

Localizationsby ISVs /partners

Agenda

UK MTD for VAT overview

D365F&O Implementation

HMRC Service endpoints

Solution overview

Configuring VAT declaration

Configuring submission process

Submitting VAT declaration to

HMRC Sandbox

Q&A

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What has changed in the UK tax reporting?

On July 13, 2017, the Financial Secretary to the Treasury and Paymaster General in the United Kingdom announced MakingTax Digital (MTD) for VAT

New law requires keep accounting records in a digital form and preserve them up to 6 years

New regulations will take effect on April 1, 2019 Deliver to HMRC through MTD for VAT application programming

interface (API) VAT return created from the digital records that are held in functionally compatible software

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The MTD for VAT solution overview

Electronic Reporting

• Configurable VAT Declaration electronic report format• Configuration of incoming and outgoing messages• Parameterization and support for OAuth 2.0 authorization process • Dynamic address requests to different endpoint of the same web-service

Electronic Messages

• Supports the process of interoperation with all MTD for VAT service endpoints• “UK MTD VAT returns” processing with production HMRC application• “UK MTD VAT TEST” processing for testing interoperations with HMRC’s sandbox application

Data management

•Import-export data package with predefined configuration

Dynamics 365 for Finance and Operations - scope of the solution

New VAT declaration configurable electronic report producing output in JSON and Excel file format.

The solution includes mandatory scope for interoperation with HMRC webservice: Retrieve VAT obligations Submit VAT return for period

Optional requirements implemented in the solution Retrieve VAT liabilities Retrieve VAT payments

Partners will be able to configure remaining or any additional upcoming optional processes or service end points, if necessary:o View VAT Return

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VAT Declaration setup

Importing Electronic Reporting configurations

Import from LCS the following Electronic Reports configurations:

Open Electronic reporting | Reporting configurations Select electronic Messages framework model | MTD VAT

model mapping and set it up as “Default for model mapping” Select Tax declaration model | Tax declaration model

mapping and set it up as “Default for model mapping” Select Tax declaration model | VAT declaration JSON (UK)

and click on Configurations | Application specific parameters | Setup on the Action pane. Then import application specific parameters from an XML file with predefined set of criteria.

Select Tax declaration model | VAT declaration Excel (UK) and click on Configurations | Application specific parameters | Setup on the Action pane. Then import application specific parameters from an XML file with predefined set of criteria.

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General ledger parameters setup

Tax | Setup | General ledger parameters | Number sequences - Setup two number sequences: Message

Message item

Tax | Setup | General ledger parameters | Sales tax: VAT statement format mapping =

“VAT Declaration Excel (UK)”

VAT Declaration electronic report setup

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HMRC MTD for VAT Service environment overview

HM Revenue and Customs: Making Tax Digital for Value Added Tax

SandboxBase URL: https://test-api.service.hmrc.gov.ukAccess: Any company or personRegistration: as a developer on “HMRC Developer Hub” Create an application of “Sandbox” type Subscribe for “VAT” and “Create test user” APIs Add a redirect URL: urn:ietf:wg:oauth:2.0:oob

ProductionBase URL: https://api.service.hmrc.gov.ukAccess: Companies registered for VAT in the UKRegistration: as a VAT registered company • Create an “HMRC online account”• Link “HMRC online account” to an HMRC-compatible

software: • Microsoft Dynamics AX 2012 R3• Microsoft Dynamics 365 for Finance and Operations

• Currently HMRC allows registration to pilot MTD for VAT

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Electronic Messages Setup

EM Setup: Configuration – Data entities package

Download from LCS | Shared asset library | Data package “UK MTD-VAT setup.zip”

Switch to the company where you are going to work with MTD for VAT feature

Open Data management, click on Import and select the “UK MTD-VAT setup.zip” file you have downloaded. Import it.

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EM setup - Sales Tax Settlement period

Open Tax | Setup | Electronic messages | Populate records actions

Select “Populate VAT return records”

Select “VAT payment” on Datasource setup and click “Edit query”

Define Settlement period for which Sales tax payments must be considered for reporting

EM setup - Web application

Setup Web application parameters: Tax | Setup | Electronic messages | Web applications

Base URL

Authorization URL path

Token URL path

Redirect URL path

Client ID, Client secret, Server token

Authorization format mapping

Import token model mapping

Web request parameters: Accept, Content type

Security roles

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Test user retrieving (for testing in Sandbox)

Authorizing in HMRC

Retrieving Test user request

Get Test user: Tax | Periodic | Electronic messages New: Action “Create test user request”

Generate report: Action “Generate test user request”

Copy from the attached response:

User ID - will be used to sign in to HMRC

Password - will be used to sign in to HMRC

VRN – need to be setup as Tax exempt number in the Legal Entity (for testing purposes only)

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HMRC AuthorizationAuthorize and Get Access token: Tax | Setup | Electronic messages | Web applications: Sandbox and Production

Get authorization code: Scope = read:vat write:vat

Obtain access token: Paste Authorization code from HMRC for 10 minutes

Access token is valid for 4 hours

Access token can be refreshed for Web applications form by Refresh token button

During interoperation with HMRC access token refreshing is done automatically

Send report: Action “Submit VAT return”

When VAT return is submitted, related fields are updated in Dynamics 365 for Finance and Operations

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Retrieving VAT obligations

New: Action “Create VAT obligation request”

Specify “From date” and “To date” of the period to retrieve VAT obligations for.

Send report: Action “Retrieve VAT obligations”

VAT obligation periods will be created or existing updated.

Tax | Periodic | Electronic messages | Electronic messages

VAT return generation in JSON

Collect data: Action “Populate VAT return records

Update status: Action “Ready to generate VAT return”

Generate report: Action “Preview VAT return”

Generate report: Action “Generate file for submission”

Review attached JSON before sending to HMRC

Tax | Periodic | Electronic messages | Electronic messages

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VAT return submission to HMRC

Tax | Periodic | Electronic messages | Electronic messages

Send report: Action “Submit VAT return”

When VAT return is submitted, related fields are updated in Dynamics 365 for Finance and Operations

Security privileges, duties, rolesSecurity privilege Access level description Associated withMaintain electronic messages

The Maintain electronic messages privilege gives full access to the electronic messaging functionality. It allows to set up electronic messaging and execute all the processing.

This privilege is included in the Maintain sales tax transactions security duty which in turn is included in the Accountant security role.

View electronic messages

The View electronic messages privilege gives read-only access to the electronic messaging functionality. It allows to view both the electronic messaging settings and messages/items but does not allow to set up or execute anything.

This privilege is included in the Inquire into sales tax transaction status security duty which in turn is included in the following security roles: Collections manager, Accounts receivable clerk, Accounts receivable manager, Tax accountant, Accountant, Accounting manager, Accounting supervisor, Sales manager, Accounts payable clerk

Operate electronic messages

The Operate electronic messages privilege gives access only to the "Electronic messages" and "Electronic message items" forms and allows to execute all the processing which are called from these forms.

This privilege is included in the Operate electronic messages security duty which in turn included in the only security role Electronic messages operator

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Q & A

• Microsoft Dynamics Localization and regulatory features: https://docs.microsoft.com/en-us/dynamics365/unified-operations/dev-itpro/lcs-

solutions/country-region

• Microsoft Lifecycle services / Globalization portal: https://support.lcs.dynamics.com/RegFGlobalizationPortal/Index

• Electronic reporting: https://docs.microsoft.com/en-us/dynamics365/unified-operations/dev-itpro/analytics/general-electronic-reporting?toc=/fin-and-

ops/toc.json

• Electronic Messages: https://docs.microsoft.com/en-us/dynamics365/unified-operations/financials/general-ledger/electronic-messaging

• Data management: https://docs.microsoft.com/en-us/dynamics365/unified-operations/dev-itpro/data-entities/data-entities-data-packages?toc=/fin-and-

ops/toc.json

• MTD legislation overview: https://www.gov.uk/government/consultations/making-tax-digital-reforms-affecting-businesses/making-tax-digital-for-vat-

legislation-overview

• Making Tax Digital: how VAT businesses and other VAT entities can get ready: https://www.gov.uk/government/publications/making-tax-digital-how-vat-businesses-and-other-vat-entities-can-get-ready/making-tax-digital-how-vat-businesses-and-

other-vat-entities-can-get-ready

• Collection: Making Tax Digital for VAT: https://www.gov.uk/government/collections/making-tax-digital-for-vat

• Making Tax Digital (MTD)-VAT End-to-End: https://developer.service.hmrc.gov.uk/api-

documentation/assets/content/documentation/f66c79c2c4fc2f0cf27c158b2411a1b2-MTD-VAT%20End-to-End%20(E2E)%20Customer%20Journeys.pdf

UK MTD for VAT - Useful links

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Yammer group: https://www.yammer.com/dynamicsaxfeedbackprograms/#/threads/inGroup?type=in_group&feedId=17055599&view=all

Contact us

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