Covid-19: HMRC delays MTD ‘digital links’ Excel deadline

HMRC has deferred by one year the deadline for businesses reporting under Making Tax Digital (MTD) for VAT to meet the requirement to have ‘digital links’ within their recordkeeping for transferring information from Excel spreadsheets and other data sources to their online VAT filing.

Businesses will now be able to continue using their current ad-hoc systems based on in-house Excel exports until the new tax year on 1 April 2021.

The original MTD for VAT guidance defined a digital link as an electronic or digital transfer, or exchange of data, between software programs, products or applications.

It specifically excluded the use of ‘cut and paste’ or ‘copy and paste’ as a way of transferring information, with the exception of during the first year of operation when having digital links was not made mandatory.

HMRC offered a ‘soft landing’ period when businesses could make a manual transfer. This was set to end on either 1 April 2020 or 1 October 2020 depending on when the business first registered for MTD for VAT.

Now in light of the covid-19 pandemic, HMRC has extended the ‘soft landing’ period.

The government website pages are still being updated, but the tax authority has already informed stakeholders and relevant bodies.

In summary
– MTD businesses have longer to put in place digital links between all parts of their functional compatible software.
– Businesses now have until their first VAT return period starting on or after 1 April 2021 to put digital links in place.
– Business still need to ensure they are keeping digital records, submitting VAT returns via an API enabled software and maintaining all digital links they may have in place already.

This announcement by HMRC helps those businesses focus on doing the business they can and managing the Covid-19 challenges, rather than dealing with changes to how they keep their business records.

Should you have any questions please contact JRW.