MTD is in full swing with the deferred businesses now falling within the scope of MTD. Although businesses were required to maintain digital records and submit their VAT returns through functional compatible software from 1 April 2019 (or 1 October 2019 for deferred businesses), HMRC allowed a 12-month soft landing period for businesses to ensure they had appropriate digital links in place where there is any further transfer of data prior to submitting the VAT return.
HMRC have now announced that businesses with complex or legacy IT systems can apply for an extension if they are not able to put digital links in place across their functional compatible software April/October 2020. This is available to any business, including charities, if they meet the criteria set by HMRC.
To request an extension a business will need to:
- make a formal application to HMRC (email@example.com) before the end of their soft landing period
- explain why it is unachievable to have digital links in place by the deadline
- provide details (including a system map) of the systems being used and explain why they cannot be digitally linked
- provide an explanation and timetable for when and how the business will meet the digital link requirements, and
- state the controls in place to ensure any manually transferred data is moved accurately.
If you feel that you will be unable to comply with the digital links by the deadline or wish to understand the digital link requirements in further detail, please contact our VAT partner Alison Birch below.