Blog Search

Archives

MTD for VAT: Second phase delayed

HMRC have announced the postponement of phase two of their Making Tax Digital (MTD) for VAT project.

This ‘phase two’ required businesses to digitally link their software all the way from entry of each transaction at one end of the process through to submission of the VAT return at the other, irrespective of how many pieces of software were used.

This means the rules on maintaining digital links from original transaction to tax return will not be enforced until 1 April 2021.

Businesses now have until their first VAT return period starting on or after 1 April 2021 to put digital links in place. HMRC have updated VAT Notice 700/22 Making Tax Digital to reflect this extension.

Digital links summary

MTD requires businesses to maintain relevant information about sales and purchases in an electronic format, using ‘functional compatible software’. This means a software programme which allows information to be recorded in an electronic form which sends and receives information to/from HMRC using the API platform (including API-enabled spreadsheets). It is possible to use more than one software programme but there must be a digital link between them.

Broadly, the functions of the compatible software must include:

– keeping records in a digital form as required by regulations;
– preserving digital records in a digital form as required by regulations;
– creating a VAT return from the digital records held in functional compatible software and providing HMRC with this information digitally;
– providing HMRC with VAT data on a voluntary basis;
– receiving information from HMRC via the API platform in relation to a relevant entity’s compliance with obligations under the regulations.

Digital records can be kept in a range of compatible digital formats. They do not all have to be held in the same place or on one piece of software. For example, a spreadsheet can be a component of digital record keeping provided the product that consolidates records, or summary records from the spreadsheet, can exchange data digitally with HMRC.

  • Latest news and testimonials

  • Latest News

    • September Q&A
      Q. I have two small businesses which are treated as a group for VAT purposes, so we only submit a single VAT return covering both …
      Read more
    • Making Tax Digital for Business: update
      In July, the Government confirmed that the Summer Finance Bill would be published in September, with the measures dropped from the pre-election Finance Bill being reintroduced …
      Read more
  • Testimonials

    • Partner – Solicitor
      I have worked with SBL over the last 10 years on numerous matters involving owner-managed business. They are professional, personable, knowledgeable and work incredibly hard to provide the best advice to their clients. I would have no hesitation in recommending SBL.
      Read more
    • Director – Networking Company
      SBL are a professional Accountancy Firm and are exceptionally up to date with all legislations.  SBL know their clients extremely well and what will work best for their business. SBL understands business and how business works and they deliver the very best considered professional advice.
      Read more
    • Director – Retail/Fashion Company
      SBL have provided auditing and other accounting services for our company for more than 10 years. They not only offered excellent support from a professional accountant company, but also delivered forward-thinking advice on how to improve our business.
      Read more
  • Don’t hesitate to ask

    SBL are here to help. With accountancy advice and tax planning experts on hand to guide you and your business on the pathway to success! You can call us on 020 7580 6822, or email us on info@sblaccoutants.com or if you’d prefer you can complete our Free Online Enquiry Form and one of the team will be in touch shortly.

    Don’t hesitate to ask

    Don’t hesitate to ask section
    • This field is for validation purposes and should be left unchanged.

    By submitting my details on this form, I consent to being contacted by a member of the SBL Accountants team by email or telephone. Privacy Policy