In light of the impact of Coronavirus, the digital links requirement of Making Tax Digital (MTD) for VAT will be deferred by 12 months to 1st April 2021.
‘Phase one’ of the MTD for VAT requirements meant that businesses had to sign up to MTD and submit their VAT returns to HMRC directly from their software. ‘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.
The Chartered Institute of Taxation (CIOT) welcome the news that this is to be delayed.
Tina Riches, Chair of the joint CIOT and ATT Digitalisation and Agent Services Committee, explained, “We welcome the announcement to defer for a year the requirement to digitally link separate software programmes in the VAT return ‘journey’. This obligation will therefore only commence from the first VAT return period starting on or after 1st April 2021.”
Tina Riches added, “Many businesses are working hard simply to survive these unprecedented times. We know that some businesses, particularly those with legacy or complex systems, were struggling to meet the deadline for this requirement. This announcement 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.”
John Cullinane, CIOT Tax Policy Director, added, “When we started to appreciate the likely impact of COVID-19 on businesses we wrote to the Financial Secretary to the Treasury, Jesse Norman MP, suggesting a number of easements to help businesses through this difficult period. A deferral of the digital links requirements was one of our key suggestions and we are pleased that the Government agrees that this is one measure that can be put on ice while businesses concentrate on survival.
“We continue to work with the Government and HMRC in resolving the many questions that people have about the response to the COVID-19 challenge, so that businesses and individuals can better understand how they can be helped, and to ensure that every opportunity is taken to avoid imposing unnecessary burdens during a time of crisis.”
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