HM Revenue and Customs updated their guidance on Making Tax Digital (MTD) last week. It’s not the easiest of reads but it does set the tone to what to expect when this burdensome legislation comes into force in April next year. Most important takeaways for us are the digital record keeping requirements and the digital links definition that flows from that.
The “functional compatible software” in which the VAT information is recorded can be a number of software programs, products, applications or spreadsheets which are digitally linked together. A digital link is an electronic or digital transfer or exchange of data between software programs, products or applications.
The VAT notice warns that the use of “cut and paste” does not constitute a digital link. However, using digital links between software to transfer data needed for the VAT return won’t be compulsory until VAT periods starting on or after 1 April 2020. This constitutes the “soft landing” which HMRC have said will be applied in the 1st year.
HM Revenue and customs latest guidance can be found HERE