Businesses participating in Making Tax Digital for VAT now have until 1 April 2021 to meet the requirement to have ‘digital links’ within their record-keeping.

HMRC has announced the deadline extension to provide participants with more time to prepare for the changes, especially in light of the challenging times many businesses are now facing.

Under the original guidelines, participants of MTD were given a year from the launch of the scheme to have in place digital links between all parts of their functional compatible software. Many businesses were working to a deadline of either 1 April or 1 October 2020, depending on their original MTD start date.

HMRC has now confirmed that all businesses will have until their first VAT return period, starting on or after 1 April 2021, to put the digital links in place.

What is a MTD digital link?

A digital link enables the transfer, recapture or modification of data to happen electronically between software programs, products or applications. Essentially, each piece of software must be digitally linked to each other to create the digital journey.

In order for your functionality to comply with MTD, there should be no manual intervention required in the transfer of data.

Examples of digital links include:

  • Transfer or exchange of data within a business (for example between two systems); and
  • Transfer of data to a tax agent in order that they can prepare a VAT return or make a calculation.

Should you have any queries on the above or require any advice or support then please either get in touch with your usual M+A Partners contact or email and we will be happy to help.