In light of the Coronavirus crisis, HMRC have announced that they will be delaying the digital links deadline for Making Tax Digital (MTD) for VAT by one year.
The deadline extension will give businesses more time to focus on managing the challenges of COVID19 rather than implementing new software and processes for their business records.
HMRC have said, “We understand that the impact of COVID-19 is creating extremely difficult times for all, and we are committed to helping in every way possible all those businesses facing unprecedented challenges.
“Therefore, we are providing all MTD businesses with more time to put in place digital links between all parts of their functional compatible software. This means that all businesses now have until their first VAT return period starting on or after 1 April 2021 to put digital links in place.”
What are digital links?
Businesses can sometimes use multiple systems (including copying and pasting to and from excel spreadsheets) to help bring together financial records and prepare their VAT return.
However, the new rules mean that businesses would no longer be able to manually input data including manipulating or consolidating data or carry out error corrections in spreadsheets. If businesses are using more than one application, every piece of data that flows between that software must be exchanged digitally, and have digital links between them.
These changes were due to come into force on 1 April 2020 and have now been deferred until 1 April 2021.
MTD digital links delayed not cancelled
Although this deadline extension means you can continue to copy and paste data from spreadsheets without digital links, it’s important to stress that it has been delayed and not cancelled. At some point, you will have to use digital links between your data, so we recommend that you use this extra time to get set up and practice using the software before the deadline, in order to avoid last-minute panic.
Switching to online accounting can also bring many other benefits to your business that can help you manage your finances, especially in uncertain times.
We can help you with Making Tax Digital
We are Making Tax Digital experts and can help you get ready for the changes to the way HMRC accept data. We can help ensure that you are compliant with HMRC and MTD and help set you up on cloud accounting. If you have any questions about these changes, please contact your usual Ellacotts contact or contact us here.
Stay up to date with the latest changes on our Making Tax Digital blog.
The UK government have announced a package of measures to further support businesses during the Coronavirus crisis.
