Whilst the dust has long settled on the introduction of Making Tax Digital for VAT back in April 2019, we are fast approaching the end of the ‘grace’ period as promised by HMRC
With MTD’s first birthday in April 2020, the grace period will end and businesses will be expected to have a digital link in place.
What is a digital link?
Basically, in the 12 months from its introduction in April 2019, HMRC agreed that businesses would be able to cut or copy and paste data and they would consider that a kind of digital link. This allowed businesses the time to ensure their digital accounting system could link directly to HMRC’s.
Usually, cutting or copying and pasting of data is strictly prohibited by HMRC, and they are due to begin enforcing this from April 2020, with any businesses not complying feeling the full force – or rather penalties – of the VAT inspector.
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What counts as a digital link?
The strict rules defining what a digital link has 2 characteristics: Data is transferred electronically between software programs, products or applications,
The transfer is automated – meaning no manual intervention such as copying data by hand or manually moving data between two different pieces of software.
What you need to do now
Lots of businesses will still be relying on their cut or copy and paste technique, but from April 2020 they risk being in breach of the legislation if they continue to submit their VAT returns in this way.
HMRC state that businesses need to move their accounting to “functional compatible software” such as Integrity Software’s construction accounting system, Evolution Mx. Our software is both MTD-ready and Reverse Charge VAT-ready and we are continually updating our systems to ensure they remain compliant with all upcoming legislative requirements.
