Revenue publishes further information on Making Tax Digital requirements

29th August 2018

HMRC recently published VAT Notice 700/22, giving taxpayers more information on the ‘digital links’ required as part of its Making Tax Digital for VAT (MTD for VAT) initiative, and mandating a ‘soft landing’ period for taxpayers who may struggle with the IT demands associated with MTD.

When MTD for VAT comes into effect from 1 April 2019, businesses with a taxable turnover above the VAT registration threshold (currently £85,000) will be required to keep their records in a digital format.

Businesses will also need to file their VAT returns digitally using Application Programming Interface (API)-enabled software, and not through HMRC’s current portal.

HMRC will allow a ‘soft landing’ period for businesses to ensure they have digital links in place between their MTD for VAT software programs. The Revenue also confirmed that, for the first year of mandation, businesses will not be required to have digital links between software programs in place.

The Notice states that a digital link is ‘an electronic or digital transfer or exchange of data between software programs, products or applications’. HMRC will accept digital links as:

  • linked cells in spreadsheets
  • emailing a spreadsheet with digital records to an agent so that they can import the data into software in order to carry out a calculation (such as for partial exemption)
  • transferring digital records to a portable device, such as a USB stick, to give to an agent to import into their software
  • XML and CSV import and export, and the download and upload of files
  • automated data transfer
  • API transfer.

The Notice also states that ‘the use of cut and paste does not constitute a digital link’.

HMRC will not supply MTD for VAT software for taxpayers to file their VAT returns, but has provided a list of software providers who have developed MTD-compatible programs. This list will be updated over time, as more software providers develop MTD for VAT-compatible software programs.

For more information on MTD for VAT, please visit our Hot Topics section.

We can support you through the changes that are being brought in for recording and filing of MTD for VAT . Please talk to our Cloud Accounting team if you require any further information on how this will effect you and how we can help you be compliant with MTD for VAT. We also have a wealth of advice and information on all aspects of VAT, including essential advice for VAT planning and how to manage a VAT inspection.

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