Making tax digital (MTD) for VAT requires you to do two things:
- record data concerning your sales and purchases digitally; and
- transfer that data via digital links to the MTD-enabled software which is used to submit the VAT return.
Many business systems contain pinch points where different software programmes or spreadsheets do not communicate so summary totals need to be transferred by hand (retyped) or by copying and pasting. This non-automated data transfer must be replaced by a digital link to comply with the MTD regulations.
HMRC have allowed businesses a one-year concession from the digital links requirement. This means that you can transfer VAT data manually and there will be no penalties for doing so within this ‘soft-landing’ period. The soft-landing period ends at the start of your first accounting period which commences on or after 1 April 2020, or 1 October 2020 if your business was granted a deferred start date for MTD.
However there is now the possibility of an extension to the digital link concession if changing your accounting system to insert digital links is unachievable within the soft-landing period.
There is now the possibility of an extension to the digital link concession.
You need to apply to HMRC for the extension to be granted, giving reasons why it is needed and providing a timetable of when those digital links will be insert- ed. You will also have to provide
a map of the VAT recording system which highlights the points where a digital link is missing. We can help you with that.
Any extension granted to the digital links concession can only last for a maximum of one year and must be applied for before the current soft-landing period expires.