Newsletter issue - May 2020.
HMRC have announced the postponement of phase two of their Making Tax Digital (MTD) for VAT project.
This '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.
This means the rules on maintaining digital links from original transaction to tax return will not be enforced until 1 April 2021.
Businesses now have until their first VAT return period starting on or after 1 April 2021 to put digital links in place. HMRC have updated VAT Notice 700/22 Making Tax Digital to reflect this extension.
Digital links summary
MTD requires businesses to maintain relevant information about sales and purchases in an electronic format, using 'functional compatible software'. This means a software programme which allows information to be recorded in an electronic form which sends and receives information to/from HMRC using the API platform (including API-enabled spreadsheets). It is possible to use more than one software programme but there must be a digital link between them.
Broadly, the functions of the compatible software must include:
Digital records can be kept in a range of compatible digital formats. They do not all have to be held in the same place or on one piece of software. For example, a spreadsheet can be a component of digital record keeping provided the product that consolidates records, or summary records from the spreadsheet, can exchange data digitally with HMRC.
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Please be assured we are preparing for our services to continue as normal. We have business continuity plans in place to minimise the risk of infection and make sure we can continue to deliver a business-as-usual service to our customers should an infection occur at an office. These include implementing clear guidelines for employees, providing support and advice for anyone who needs to self-quarantine, and issuing guidance on following safe hygiene practices across the organisation.
You can find further information on Covid-19 below to keep you updated: